Becoming a forex trader is a compelling feat for most people who’ve dug deep enough to know the luxuries that professional traders can afford. Pros are free from the binding 9 AM to 5 PM day jobs, the long and stressful commutes, and the limited monthly paychecks that seemingly vanish into thin air. Yet amidst the supposed grand lifestyle that professional traders enjoy, the hardships often remain untold and are therefore overlooked by aspiring traders. Here’s what you should be focusing on if you are to become a professional trader.
What it Means to be a Professional Trader
While the level of success can vary from one trader to the next, the standard of success in trading means that an individual can consistently extract investment gains from the forex market without incurring a large enough drawdown on his/her account. Professional traders do not necessarily end the trading day or week posting impressively high net gains that dwarf those of an individual trader’s. Even a one percent growth rate that is consistently pulled off can sum up to a large amount of cash at the end of the fiscal year.
More About Discipline, Less About Being Smart
The secret to making ridiculous amounts of money in trading the foreign exchange market lies not within the tactical secrets that Wall Street pros and bankers implement. It’s more about keeping a disciplined approach, specifically when it comes to losing trades. Professional traders don’t stick around until their losing positions leave a big mark on their account balance. They unload their positions and move on to the next potential trade idea. This transition is done so effortlessly that the trader does not even think about the losses incurred from the previous position.
Technical and Fundamental Key Takeaways
A vast majority of traders will be divided into two groups – those who worship technicals and those who worship fundamentals. Professional traders will be the in-between people who know the importance of both aspects of trading and are aware of which key points to take away from a news source or educational material. Technical points to look at for currency trading will include daily or weekly volatility, price ranges, and high-impact economic data to be released by central banks like the Federal Reserve. Fundamentals, on the other hand, should be approached using top-down analysis, starting from the global view of a country’s economy and then narrowing down to its local markets and consumer demographics.
Every Dollar Should Be Well Invested
A professional trader makes use of his/her resources without waste. Novice traders often use one broker and then trade one or two currency pairs for the remainder of their career. Although sticking with a single broker and with one or two currency pairs is ideal for simpler account management, you are unable to maximize tradable opportunities and changing spreads or commissions per trade. Forex brokers like Robin Hood offer no-commission trading while others provide better execution times or more intuitive platforms.
Professional traders spend less time on price charts and more time on news materials and other reliable sources of information. “Measure twice, cut once” is the mantra that fits this characteristic perfectly. You’d want to exhaust all your reasons for doubt and confidence before actually pulling the triggers. Companies like AlfaTrade can be invaluable resources for platform help as well as market knowledge that can empower you to make better investment decisions.
Advancing to the top of the trading ladder will be filled with stressful situations and sleepless nights. Establishing a well-rounded trading plan and a confident mindset will help simplify the process and lessen the losses you incur along the way.