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The 2 Attributes Every New Trader Needs To Start Trading FX

The 2 Attributes Every New Trader Needs To Start Trading FX

Tyler Yell, CMT, Currency Strategist

Talking Points:

  • The Discipline of Trading
  • What Hurts New Traders
  • The Two Characteristics of Successful Trading

Self-discipline has a bigger effect on academic performance than does intellectual talent.”

-Charles Duhigg, The Power of Habit

The emotions that come when putting your capital at risk turn trading into something more than simple analysis. Analysis is a detached process of observation in which you look for clear patterns in order to develop an edge that you can profit from. However, when you’re capital is at risk, something more than analysis alone is required.

If you’re interested in learning what else, besides poor emotional management, it takes to trade like a professional trader,register for our free course here.

The Discipline of Trading

Discipline is a tricky topic. Many traders believe they have more than they really do or practice. What’s worse, the absence of discipline opens you up to multiple dangers that are near impossible to overcome.

The 2 Attributes Every New Trader Needs To Start Trading FX

This quote can be very helpful. Because what you want right now is often now what is best for you nor is conducive to what you truly want in the long run. Trading brings together two things at all times that human beings hate: being wrong (sometimes publicly) and losing money.

Learn Forex: Have the Discipline to Recognize if a Trend Is Moving Away From You

The 2 Attributes Every New Trader Needs To Start Trading FX

Presented by FXCM’s Marketscope Charts

Sadly, many traders think they can avoid being wrong by not admitting they are wrong right now. I quantify admitting you are wrong by closing out a losing trade once it goes past your pre-determine loss point. Another helpful way to define being wrong or making an error is any deviation from your trading plan, regardless of the outcome. That will help you rely on a proper process as opposed to only being focused on the short-term outcome.

What Hurts New Traders

The mindset that comes with trading well is unlike anything most people have come across. That is why automated trading is so popular in trading, you don’t have to fight the devil within to enter & exit good trades. However, when traders won’t admit that their wrong, through closing their trades, they’re effectively admitting that they don’t have the mental hardware correctly installed for trading effectively.

The 2 Attributes Every New Trader Needs To Start Trading FX

So how do you install the necessary mental hardware? For starters, it’s helpful to note that you’ll likely have to think in a way different than you have before. If you’re familiar with baseball, it may be helpful to think like a batter. A batter is attributed a batting average for getting a hit and a batting average of 0.350 means that a batter is getting a hit on 3.5 out of ten at bats or 35%. To give you an idea, that’s near the top batting average in Major League Baseball or MLB. If you can bring your trading mentality to think like a batter, you’ll see that having the discipline and being O.K. with a 35% win rate is a new mentality that can help your overall trading results.

The Two Characteristics of Successful Trading

To carry the baseball analogy further, it stands to reason that an appropriate through process is not all that’s necessary. You also need a good technique to hit the ball or in trading, a decent edge to put you into a higher probability trade.

An edge is akin to a trading strategy and there are all sorts of edges out there so it’s best to find the one that works best for you and how you’re comfortable viewing the market. My preference is a combination of Elliott Wave & Ichimoku for finding short term and medium term trends to ride.

With an edge to trade and discipline to follow, you’ll be on your way to separating

yourself from the pack.

Happy Trading!

---Written by Tyler Yell, Trading Instructor

To contact Tyler, email tyell@dailyfx.com

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Tyler is available on Twitter @ForexYell

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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