Gold forex trading success directly correlates with trading discipline or lack of thereof. The key to success is relatively simple. Acquire trading discipline and you will have the greatest probability of succeed as a gold forex trader.
Of course, gold forex traders use tools such as charts and other value-added information and methodologies to make trading decisions. Yet without trading discipline, new gold forex traders are unlikely to achieve financial goals and freedom they desire. Emulate and master the seven essential traits of trading psychology:
- Thirst for Knowledge
- Observation Skills
Master your emotions to control trading performance. Composure benefits traders in all aspects of life, but a lack of composure can be a fatal flaw. Experienced traders stay calm and rely on instilled process and methods every trading session. Over-emotional individuals fail to plan for success in gold forex trading. Failure to plan is inadvertently planning to fail:
- Composed traders know that they are likely to have some losses in the trading session. Successful traders quickly get out of losing trades to conserve capital and avoid moving the stop loss or adding new money to losing trades.
- Successful traders also choose and stick with methodologies after testing them in a demo account. Making the same types of trades over and over enables traders to execute with confidence, such as buying support levels and selling resistance.
- Backtesting is an excellent way to evaluate the methodology’s reliability. For instance, if you’d traded each time a signal was given in the defined past period and profits were bigger than losses, your method is a potential winning strategy.
- Test strategies until you identify at least one that provides consistent, positive results over various time frames.
Most people instinctively know that traders should stay calm and composed. Expressing worry or fear won’t help to reverse losing trades, but doing so can cloud the mind. Avoid speculation and stick to tested methodologies. Start small and earn the right to make larger trades when you’re ready.
It takes time to learn gold forex trading. Gold forex trading is risky. Without investing the time and effort to learn gold forex trading, 100 percent capital loss is possible.
As a new trader, you should develop one or more methodologies before committing actual capital to the gold forex market. Open a demo account and practice developing these methods at a comfortable pace with zero risk of loss until you are ready to go live.
Some traders mistakenly confuse patience with slowness. They correctly point out that traders must frequently make fast decisions. However, many new traders confuse the ability to move quickly with over-trading. Over-trading can increase risk. Before entering live trades:
- Write about the methodology in detail.
- Note each of the market prerequisites, sometimes known as the market set-up, before entering any order.
- After establishing personal trading rules – your “rule book” – follow them.
Keep in mind that not all methods work all of the time. If your method works well at least half of the time, stay with it. Patience is a gold forex trading virtue.
3. Thirst for Knowledge
The most successful gold forex traders love to learn. They have a thirst for knowledge. Some say they trade because the market teaches them something new each day.
Many traders confuse learning with listening to or watching financial news throughout the trading day. It’s important to remember that the news reported by the channels has already happened.
Thirst for knowledge is a bit like satisfying an appetite at the dining table:
- Consume gold forex trading instruction in small, digestible pieces.
- Enjoy the experience.
- Savour new information.
- Keep learning more about gold forex trading.
- Read and watch material about gold forex trading.
The passion to succeed in gold forex trading can actually guide you to achieve more discipline and knowledge. A free gold forex demo account can start you on a satisfying, lifelong quest.
There is never a point at which the gold forex trader knows everything. The foreign exchange market is the largest marketplace in the world. As the market evolves, gold forex traders must evolve as well.
Detachment allows professional traders to separate individual performance from the ultimate course to success. Professional gold forex traders leave the gambling to Las Vegas. Because successful gold forex traders want to continue to trade each day, maintaining and preserving equity capital in the trading account is essential.
At the same time, detachment gives traders the ability to follow already established trading rules. To be successful, you should never waver from your researched and well-thought-out rule book. For example, capital-conserving best practices may dictate lowering trade size after two small losing trades and adjusting the size up to original lot size after two successively profitable trades.
A losing trade does not mean the trader has failed. All gold forex traders lose money, but consistently successful traders take small losses to reap net profits every day. They never take big losses.
Successful traders anticipate hitting singles but not home runs. When a home run trade happens, the experienced trader chalks it up to following the rule book and good fortune.
Consistency and follow-through in gold forex trading build confidence and control. Although no two trading days are the same, the trader must commit to playing by the rules each session. These rules always include trading with discipline and sticking to defined methodology.
6. Observation Skills
Gold forex trading requires sharp observation skills. New traders must learn to monitor and analyze the gold forex market. They must develop new eyes to understand inter-relationships, including:
- The gold forex market and how it works
- Currency values, and what causes them to change
- How to predict future currency values based on historical data
Charts and other value-added information helps new traders monitor and analyze the gold forex market according to time frame, currency pairs, pairs prices, volumes, and trend lines. All the information can seem overwhelming until the trader puts it all together by testing trades in a free demo account.
Gold forex traders develop observation skills as knowledge about these elements solidifies. Many new gold forex traders study longer time frames to gain historical perspective at first. Open a demo account to focus on shorter time frames and timely trades and monitor prices and values of currencies in real time.
The ease or difficulty of each trading session is somewhat like a good or bad day at any job. Some trading sessions seem easy and inspire confidence. Of course, not all gold forex trading sessions are easy.
Difficult trading days should not defeat the trader’s confidence. By following the established risk management plan and rule book, the trader knows that a difficult session is not forever. With unwavering discipline, the trader earns a small profit on difficult days and stays in the game to experience more enjoyable and profitable days in the future.
Training the mind to achieve trading discipline can help new gold forex traders find balance between greediness and excess caution.
Many successful gold forex traders enjoy the freedom to work from home at a job they love. Most, if not all, successful forex traders possess the seven essential traits of trading psychology. Open a demo account to develop trading content, methodology, and trading discipline. Once you are confident and comfortable, open a live account and put your methodology to the test.