What does it mean to be a forex trader? What is like to be a trader who is brand new and just starting in pursuit of a carrier? What does it mean to be a professional forex trader who has traded for years and who is going to trade until he dies? Answers to these questions are not easily accessible. These are the things that we can’t really learn from a book or Google. This is just something that we can learn from someone who has already walked down that road or something that we simply need to experience. Luckily, we were surrounded by a lot of different types of traders over the past years so we had a chance to perceive forex trading from many angles.
Surely, it is different when someone is just a beginner, where everything is new and exciting apart from some trader who is in the game for fifteen years. After the fifteen years, a lot of sleepless nights have gone, foolish mistakes are no longer involved and the excitement is pretty much perishable. For someone, it becomes a legitimate business and number one priority of income and for 99% it is just temporarily flame. There is a big difference between incorporated traders and a skill-less guy who trades occasionally trying to make a little bit of money. We want to dive deeper into this topic because we think it’s such a huge piece of the puzzle of becoming a good forex trader.
First thing, if we want to go to any business that is thriving and succeeding we need to have a schedule of working hours. A methodical approach where everything is set and where everyone has a specific role is crucial. Treating forex trading as a business is a basic rule. The problem with trading is that most people treat it as a hobby with the absence of any kind of structure to their trading schedule which might be the worst thing to do.
Let’s take an example of a professional gambler, the person who makes the living of gambling. If we talk with professional poker player, he doesn’t go sit down on a poker table all day long, that is not how he makes his money. He plans out: “OK, I am going to play on Friday nights from 9 pm to 2 am because that’s when all the drunk tourists are in town, that’s when I’ve got my edge” or “I am going to play these eight tournaments during the year, no more no less and that’s my schedule.”
In contrast, we have a recreational gambler who sees a blackjack table and say: “Oh cool, I could play, I’m feeling lucky tonight”. The professional gambler is on that table as well but he has crystal clear goals. He is like: “I am going to play for 4 hours or until I lose 2000 bucks”. Eventually, If he loses this amount of money or after 4 hours he will get up and leave. Those people have a schedule, they have planned out their business. Here we have all these analogies because we want to point out how important it is that we have to have our business schedule. The stock market is open only seven and a half hours a day, when we speak about currencies one of the great things and the worst things is that is always open. So there is a chance where we can sit at any time and ruin our trade with just one click of a mouse.
From experience, we know that without a plan we might sit inevitably in front of the system all day long. This is something we will try to avoid because we could easily fall into the trap of over-trading. Most of us are used to going to a job, putting hours and getting paid for it. At some point in life, we all have done that. In trading, we will probably have some days where we are not going to make any trades, so we might feel like we are not really working because when we are actually working we are clicking buttons, we are making money. These moments can often be very irritating for traders, therefore out of inconsistency most people might start to over-click and get into a trade to justify their presence. So working 24 hours as a fulltime trader on the open market is a very unique type of job where we simply need to have our working hours well planned.
How exactly you are going to customize everything is completely up to you guys because everyone has a different lifestyle. We need to understand how to fit trading into our life. The market shouldn’t have control over our time we should try to dictate the tempo of our trades. How we might do that? It will be good to look at the upcoming news reports or events and identify times during the week where there is likely to be a huge move in the forex market. That is how we could plan in advance to be in front of the system during those times and stay away from the system during the other times. It’s always better to plan out the week ahead and try to avoid times where the market is just chopping around without clear direction and high volume.
Of course, we can’t always predict when that is going to happen. The market is a big wild animal and it tends to do crazy things that we couldn’t even expect. So if we want to be successful on the market it will be good to structure our life to where we can follow our routine based on great research and discipline. Routine is very important. Which is why we will try to reveal some of the rituals and habits of successful traders. So for dedicated traders, first thing in the morning we could do is to check overseas markets (Europe, China, Nikkei) and US equity futures. Of course, we are not going to deal with details like when is the best time to hang out with your friends and family or when is the perfect time to swallow your vitamins, that is totally up to you guys. Here we just want to focus on some trading routines that we might implement in our lifestyle.
Further on, we could check news reports like forexfactory.com or fxcm.com, there are plenty of resources out there. Keeping ourselves up to date and integrated into the market is a great thing to do. Our job should be to know as many details as we potentially can and constantly educate ourselves about all the features. Considering the risk domain, we should try to look up for relative strength or weakness, what are the strong currencies, what are the weak currencies. This should be an automatic thing we do every time.
We want to trade when a good opportunity is there and just because there is a good chart pattern. Looking for high-percentage setups is one of the routines that we might do as well. So staying up to date to the news is super important. We also need to make sure to be familiar with the upcoming week’s economic news. For example, watching or reading financial news (CNBC) every day for about 20 minutes is highly recommendable. This is a great medium to stay involved because they always talk about currencies there.
Next what we want to point out is that we might consider downloading The Trader Work Station App, so-called TWS, MetaTrader 4, or MetaTrader 5. Professional traders often like to say that these apps turn out to be the best things that ever happen to them because before mobile trading they were handcuffed to the system. Before the TWS they didn’t even know what was happening out there and if they did know they couldn’t make a change. In today’s world with mobile devices we could stay dialed in the market all day long. One more time, starring at the screen all day long is a very bad thing however being dialed in the market all day long is a great thing.
What we want to do here is to try to check prices periodically. The cool thing that we might do is to set the app to alert us when prices do something or when volume does something. We don’t want to sit all day and watch, so setting alert through our mobile trading assistant is a good way of saving our precious time. Signing up for service that delivers news to our phone or email is recommendable as well. Again, CNBC.com or Marketwatch.com just keeps us dialed in for the big news.
One of the hardest things to figure out as a trader is when to trade and when not to trade. Everyone at the end has to go through the process when they trade too much and then when they really start to understand the notion, they actually swing too far another way where they find all the reasons to not make trades. This pattern from over-trading to under-trading is quite familiar for most of us, it’s part of the process and the great thing about this is that people eventually might consider the risk. Before that they were just thinking about the money, they were never really cautious. Therefore, one of the hacks that we might implement in our daily routine is to find a hobby or some activity that can occupy our time.
We don’t want to click buttons too many times. We don’t want to fall into the trap and make trades out of boredom. Learning how to read a chart is not that hard, there are calculators that can point us what to do but knowing when to stop and how to allocate our time is the hardest part of trading and we should take it seriously. So what we all need to develop is a strategy and routine that is unique for each one us and that works in a way that is comfortable and profitable. We need to approach forex trading as a business and we want to do that with discipline and a plan.
If we develop certain routines we might master ourselves and our emotions by not subjecting ourselves to every single move up and down in the markets. We should trade by dictating our terms with well planned hours of activity and that might be a great base to start and continue trading. Strategy and routine are the two main words we want to remember if we strive for improvement and control over our trading system. Apart from this, we need to allow ourselves to have a balanced life outside of trading.