Being in the 5% club means making consistent gains on your forex account. This is done by building an account through small and steady gains and building it at a rate in which you can control it. In this article, we will share a few attributes of profitable forex traders which we believe are critical to their success.
Unfortunately, 90-95% of forex traders fail to ever make it to a point where their winning trades outweigh their losing ones. Often times, the traders who fail to make it to the 5% club are those who expect to quickly make money through trading or attempt to flip accounts in a short period of time. Traders with this mindset will usually lose money quickly and burn out fast.
Plan your trade, trade your plan.
The first step to being successful in trading is creating a profitable strategy. This is achieved by spending significant time backtesting and researching forex trading strategies. The next step, which is often harder for traders, is to actually follow through with that plan. In stressful times traders have a tendency to change their approach to avoid losing a trade. This usually leaves traders in a worse situation than they would be in if they had stuck with their original plan. Make sure you've backtest your strategy and have the confidence to stick with it!
Download our FREE trading plan template here.
Becoming a profitable trader won't happen overnight. Trading successfully requires patience, consistency, and grit. There is no fast pass to success in trading. Trading requires lots of backtesting and strategizing to develop a plan which works for you. Your success in trading is a personal journey that only you can earn. Trading mentors can guide you on the path to success but in the end you are responsible for doing the work.
If your only interest in trading forex is to make money, you probably won't make it too long before you burn out. As we mentioned previously, becoming a successful trader takes grit. You will likely lose many trades before you'll win some. For some traders, it takes years before they're consistently making more than they are losing. To be able to make it through these harder times you have to be motivated by something other than monetary success, because it won't always be there. You have to truly love trading and love the process.
A trade closed at breakeven is one that is neither a winner nor a loser. It closes at a particular price where profit and losses both equal to zero, or close enough.
The beauty of breakeven trades is that, although you may not increase your account with them, they enable you to protect your capital, which is crucial when being a part of this game.
Let's discuss the two types of regular breakeven trades and the psychology behind them.
The above scenario usually unfolds through wild swings of price action and unpredictable market events, and it's a smart move to protect your capital and exit at breakeven.
However, traders often end up with breakeven trades for the wrong reasons, usually encounter fear and see a positive trade turn negative.
You've been in a trade that hasn't been going well, and you are finally starting to see price creep back towards your entry level. Although it's never really a good idea to let losing trades run, doing so can work to our advantage.
As the saying says, "cut losses short, let profits run", and of course no one wants to close out on a trade in a loss, but sometimes it's the better thing to do; it gives you more time and energy to focus on other potential setups, instead of dreading the losing trade you're in right now.
Hope can lead a trader to hold a losing trade which they should have exited a long time ago. Closing a trade at breakeven is the best that you can do, and that doing so can save you from taking on more significant losses than necessary.
But obviously, no one knows exactly what will happen, so it's not like we can "choose" which scenario we want to make a reality. It's way easier said than done, but the message I'm trying to portray here, is that it's okay to close out early on a trade that is not moving in your favour.
It's essential to keep track of your breakeven trades; they reveal a lot about how you keep yourself together in times of extreme stress.
Next time you close at breakeven, take a step back and ask yourself what that zero in the P/L column means. Did you execute your trade according to plan, and the market just didn’t go your way? Or were you overcome by fear, greed, or hope?
Charge it towards your experience, make the adjustment to your forex trading plans, and move forward.
A key component of being successful in the trading field is by maintaining consistent long-term results. This article is to draw your attention to some of the more nuanced aspects of successful trading that you may or may not have been paying attention to, which can essentially make or break your account.
Though I can't promise you success, if you read and implement the three points discussed below, you should see some improvement in your trading results.
To anyone not aware of the power of staying on the sideline, this is one of the easiest ways to maintain consistency in trading. Immediately it sounds counter-intuitive, but it works.
To know when not to trade, you need to know when to trade. This would involve mastering an effective trading strategy such as price action trading, market structure trading, news trading, or preferably a combination of all three.
By having a good mixture of confluences in your trade setups, you will know your trading edge and when to trade. When you see a setup without a good mixture of confluences, then you'll know to not enter.
An example of this would be if you see a mixture of price action sell signals on Gold, such as a descending triangle pattern on the daily timeframe, maybe a rising wedge on the H4 timeframe, or anything else pointing towards a sell on Gold from a technical aspect. However, maybe the Fed just came out and announced that inflation is on the rise in the US, and fundamentally the USD is not performing too well. This mixture of buy and sell signals could make you step back and stay on the sidelines to see what happens next.
Always remember that by not trading, you are not losing money. Obviously, the long-term goal is to make a fantastic ROI, so eventually, we will have to enter some trades. However, stepping back for a day, or maybe even a week, isn't a bad idea. It allows you to see what's going on and how market prices are reacting to specific events.
You need to work out what you want from this, and how you will realistically achieve this goal. For example, my goal in trading is to make a 60-100% ROI per year. Looking back at my past three years of trading, I've noticed my winning months average out to about 6-10% ROI per month swing trading and barely paying much attention to my positions. Just simply finding amazing setups and letting them run until either SL or TP, while trailing stops when in profit.
Making 60-100% per year is much better than making 170% in February, then losing it all in March. Your chances of becoming successful in this field are improved simply by taking a part-time view on your trading, rather than wanting to be a full-time trader straight away.
You need to develop a consistent trading routine that is devoid of gambling-like behaviour. By becoming organised and disciplined, you'll develop a routine that reinforces positive habits instead of negative and possibly costly ones.
A common negative habit is entering a trade by over-leveraging or even over-trading, you win one or two of these gamble trades, and that easily you've began to reinforce a bad habit that is hard to break. These trades never last, and usually one bad trade can wipe out all your winnings.
An example of a positive habit is checking a pip value calculator and working out a safe lot size to use to enter a setup you have. By doing this, you know you're using a position size, which dependant on your stop loss, you're only risking x% of your account. I personally recommend risking 1-2% per trade.
This obviously goes without saying, but you're better off choosing and sticking to positive habits rather than negative ones. Positive habits lead to positive long-term results and overall performance in the trading game.
Crazy enough, I took a trade on CAD/CHF that resulted in a major profit, and then it set up again... You can read the blog post I made about it here.
So very similar to my last trade, I was bullish on the CAD, and liked the idea of jumping in on another pullback. Here's what I sent out to members inside the private group:
So I took the trade... and sure enough the bull rally continued! Shortly after, I was moving my stop to break even.
Once price rallied to the previous high, I started to trail my stop loss. Here's what I sent out to members:
Sure enough, it rallied a bit past this level on fresh CPI news out of the US (which, due to the CHF and CAD's relationships to USD respectively, caused the pair to spike higher). From here, I aggressively moved my stop loss higher, in case there was a spike the opposite way as we often see post news events.
In the end, the trade was a great winner. Closing out at about a 4 to 1 risk to reward. Meaning, for every $100 I risked, I ended up making $400. Not a bad way to start the week!
For full transparency, my trades are NOT always this good. I took a loss shortly after this on AUDUSD, which resulted in a -$550 loss. Here's what I thought would happen! (I ended up getting spiked out of the trade on a stop loss. Frustrating, but part of the game sometimes!)
You win some, you lose some. The main point though is that the big wins can outweigh the losses, and that's all that matters in the end. If you like my trade breakdowns, make sure to join us inside the private group, where I share all of my trades in realtime with analysis like you've seen in this post. Use code READER for a discount! Click here to join our private discord channel
With anything you do in life, setting goals and expectations is crucial. It keeps you on the right track and provides benchmarks to ultimately, obtain the long-term goal; being a wealthy profitable trader.
However, I've come to realise that setting these small benchmarks can actually be quite dangerous. Setting these too high or too unrealistic, we're just setting ourselves up for disappointment and failure from the pressure of achieving it in not enough time.
Usually, as a brand new trader, you quite quickly learn how hard trading is, from the performance aspect, all the way to the psychological aspect, probably the most difficult. Here are 3 trading goals that often lead to disappointment:
Taking more trades and being in the market technically makes you gain more experience, but it doesn't mean you'll learn how to trade properly any quicker than if you took fewer trades.
In fact, this dangerous goal and mindset will lead to overtrading, which we all know is a common pitfall for new traders, leading to failure.
Quality over quantity, you've definitely heard this phrase before, and this same rule applies in trading. Instead of being in 4/5 separate trades, focus on one or two trades, make sure you have many confluences in your trading, learn how to get that perfect entry, and everything else that comes with opening and closing a trade from start to finish.
Come on, who are you honestly trying to fool? I get it, after you've seen all these Instagram gurus preach that you can make so much money and you've finally decided to take the leap and open an account, you quickly learn that making $5,000 in a trade from 10 pips, requires a 6-figure account, which almost everyone does not have.
Medical students do not become skilled surgeons overnight. Apprentices do not become mechanics overnight. This same rule applies in trading. You, someone who just found out about trading through a couple of Instagram ads, do not become a pro millionaire trader overnight.
It's pretty absurd that some people genuinely believe that this is obtainable because I can tell you first hands myself, I've lost more than £20,000 before I made my first £1,000.
Like any profession, it takes years of practice and experience to develop the skills needed to turn trading into your primary income source. You're simply setting yourself up for disappointment if you try to fight this statement.
The profits you make do indeed determine your strategy's effectiveness, but this doesn't necessarily dictate success on a day-to-day basis. Trading is a long-term skill, not something you quickly do to make a bit of extra cash for the day.
Instead of gauging daily success on how much you want to make, focus instead on monthly percentage profit gains. Instead of aiming to achieve $50 per day, strive to achieve +10% per month with a $10,000 account. This way, you can achieve that same target just over a more extended period of time.
Trading isn't just about the money you make, but instead the actual skill behind it. Being able to interpret data about the economy to your advantage and taking "educated guesses" as to the direction of a market. This can be done through technical or fundamental analysis or both.
In an environment that requires a lot of focus and concentration, getting rid of this unnecessary baggage takes a lot of weight off your shoulders and, in the end, becoming a profitable long-term trader.
I wanted to talk about rushing the trading journey because this was a significant challenge I had very early on in my journey, and it is one I see the majority of traders make often unknowingly. That is the danger of rushing, you have no idea you are even doing it.
Mid-2018 I made the decision that I wanted to leave my corporate graduate job and seriously pursue a career in trading. I was so tired of seeing YouTube advertise 2 day trading workshops that would magically turn me into a trader... you can just smell the bullshit on these guys. If you have even a smidge of common sense, you know that if you want to become successful in any industry it is going to take time. And I knew I would have to invest in my education (FYI I was super sceptical about this, and even though the trading platform I joined was one that had a coach I saw as genuine, I still only signed up to a month initially in case it was a scam.)
Anyway, once I had joined a reputable trading educator platform and began to work through their content, I still found myself rushing through learning how to read a price chart and backtesting, all because I was driven by a desire of wanting to live trade. Every day all I focused on was: WHEN AM I GOING TO GET TO LIVE TRADING? I just thought that I could figure out how to trade once I was on a live trading account.
And I genuinely thought my attitude was one of ambition and being driven rather than just rushing because I was impatient with the process.
Senior traders in the community I was in were telling me, “SLOW DOWN NAOMI. YOU ARE RUSHING. THIS WILL BITE YOU IN THE ASS LATER ON.”
I did not listen to them. And to be honest, I thought what the hell do they know? They aren’t sat here with me. Just because they took ages it doesn’t mean I will.
Oh how I was wrong! During an accountability session with my coach, he asked me what I wanted to achieve next year (2019). I could not answer the question. This was a major wakeup call for me. It was embarrassing. But feeling that embarrassment is what woke me up.
I knew I was going to have to start my learning from the beginning (after spending 3 months rushing). Below is what I did to rectify the situation and to ensure (to the best of my ability) that I would not rush through it again.
I spent half a day sat in my room thinking, ‘forget trading. what is your end goal? what do you even want to use trading for?’ Once I got clear on that I began reverse engineering my end goal back in stages to present day. I had my road map of every step I needed to follow.
This was a game changer for me because I finally had short term milestones to focus on. This meant I was no longer focusing solely on live trading, because there were several milestones that came prior to this.
1. Build a solid foundation: learn how to read a price chart, understand the different concepts of reading price individually.
2. Put it all together: put the different pieces of reading a price chart together so you can see the story that it is telling you.
3. Explore different strategies: review the strategies available.
4. Select a strategy: select a strategy depending on your lifestyle and time commitments.
5. Develop a strategy: get clear and write the rules out for your strategy, and purchase or create a backtesting spreadsheet.
6. Backtest that strategy: go through historic data and ensure your edge is profitable.
7. Execute that strategy: demo trade and then live trade!
I then broke down this broad plan into monthly and daily tasks. I also figured out ways to stop me from rushing. If I could devise some objective way to measure my progress then the chances of me unconsciously rushing again would be greatly reduced. What really forced me to follow a method that would actually have a high probability of working was:
Having clear and realistic deadlines that were realistic according to MY PERSONAL LIFESTYLE (we are all different, whilst I may have 10 hours a day to commit to my journey, someone else may have 1 hour. It is just reality...hence our target deadlines will be different.)
Clear methodical ways to test myself (I created objective ways to test myself so that I could see whether or not I had progresses rather than my subjective ‘wanting to live trade’ self was not the one making all the decisions.)
An overview of the trading journey. This was complete belief transference because I knew (and still know) that by following it I will reach my goals. I knew if I did not follow it then I could kiss bye bye to my big dreams of what I want to use trading for.
Did all these things completely abolish my results driven mindset?
But it was definitely the start of at least being on the right track.
The irony behind everything mentioned is that focusing on the process is actually the quickest way to get the result. Focusing on the result is the slowest way to achieve it.
Instagram and Twitter: @naomigslight
Podcast: The Trading Journey Podcast
I myself, have personally been actively trading the Foreign Exchange market for coming up to 3 years now. Here's a list of the most important lessons I learned after my first year, and I'm sure most people can relate to these points.
The first major lesson I learned was that you should not always be hanging on to your existing biases. This way, you'll be much more likely to win more trades if you trade what the market is telling you now rather than what it was telling you two weeks ago.
A profitable trader is open-minded and prepared for alternative market behaviours and is always ready to take on new circumstances ahead of them.
Whether it's failed break and retests, this can be anything, weaker-than-expected job reports, if one thing was expected to form in the market, but something else did, react to what is actively going on and take precaution there.
A plan must consist of a set of rules when you may or may not execute a trade. Many traders make the mistake to go around their plan because they think it will work out anyway.
Sometimes people also say that even when they stick to their plan, they feel it will not work out. As a result of this, you take trades on gut feelings, make sudden adjustments, and deviate from the plan, which is a sign of trouble. Whether a trade goes wrong or right, you need to build up a portfolio of trades based on a specific strategy in order to work out accuracy and overall win rate.
One way to help you stick to the plan is to keep a detailed trading journal showing your statistics. Once you see that your trading plan does work and is yielding positive results, it could give you more motivation and confidence to stick to the plan and follow through.
Trading is easy, marking up charts is easy; setting up trades is easy. The hard part of trading is learning how to be patient and disciplined enough to make the right trading decisions consistently.
Patience in trading is as simple as waiting for good trade setups to arise or waiting for price to hit your entry and exit levels. It sounds so simple, but yet it's so hard, and I understand. Many traders like to secure the profits they earnt and forget about the overall long-term move in the market, which can make them more than 3x the amount they're securing.
Trading is a marathon, not a sprint. No matter what you see on the internet, everyone deep down knows that trading is no getting rich quick scheme, quite the opposite in fact if done incorrectly. Opportunities are always around the corner and, if you're patient, you'll learn how to profitably trade in any environment the market will throw at you at any time.
Risk management…. ah…. this is what separated a trader from a gambler. We're all in this game to make money that we have work for us to make us more money, and with this comes managing our risk exposure.
This includes no overleveraging, risking more than you can afford to lose, practising proper position sizing and no disregarding stop losses. This also comes with the proper knowledge or margin, leverage and drawdown, and managing these all.
Remember, it's easy to click "buy" or "sell" or risk half your account per trade, but doing this does not help you find your edge enough against the market to be consistently profitable in the long run.
From the past almost 3 years of trading, I can for sure say this was the most important lesson I've learned.
So you're thinking of quitting your job and trading full-time, this is every trader's dream as nothing embodies freedom more than those who trade full-time. However, this type of independence isn't for everyone, so how are you meant to know when you're ready? From personal experience and through relations with other great traders, I've been able to narrow it down to a few points.
The capital you have is probably one of the most critical factors of going full-time in this game.
You must have enough capital in your account that whereby making at least 7%/month is more than double what your full-time job is paying you. And not only this, you must have enough money in the back where you can cover at least the next year or so of standard bills such as rent, utilities, and food, without having to think about withdrawing from your forex account possibly.
You must be prepared to have the capital to continue living an everyday life and be comfortable with a few account fluctuations every now and then and being prepared in case of losing streaks or large drawdowns.
There is no set amount you should have at least to go full-time as it all depends on personal circumstances, and the lifestyle you live. However, speaking for myself as an almost 19-year old university student living away from home in England, I would desire to have at least £35,000 in my trading account so that 7%/month is at least £2500 which will grow if compounded, and at least £25,000 in the bank to spend on necessities which would last me at least the next two years or so.
This is so that, if half-way through I realise I am not pulling in the best results trading full-time, I have enough time to find a good job and start getting paid well.
You must have data in your journal that proves that you're able to make consistent monthly profits on your trading decisions for the last two years every month. Of course, a losing month here and there is fine, but overall per month, you must be making on average around 8-10% gains on your investment.
Just by throwing your work clothes in the wardrobe and earning money in bed by trading 24/7, it does not mean you will be any better at making trading decisions than you were trading part-time.
If you know you're not quite there yet at making consistent monthly profits, then the idea of trading full-time should probably be put on hold as there chances of you doing so as a full-time trader will most likely decrease.
I believe trading does not need to be "full time" where you sit at your all day and take countless trades; it all depends on the type of trader you are.
I think most people would agree that swing trading is probably the best type of trading, as it allows time to catch the next full swing in markets. For this reason, I think having a job or some responsibility is a good thing as a distraction, to keep you away from the charts whilst the trade is open.
Sitting at your desk, 24/7 could lead to over-trading, and we all know what the usual consequence of that is.
That's why if you're planning on quitting your full-time job to pursue trading full-time, you should definitely have something else to do throughout the day and that can be literally anything!
This could range from being in charge of taking and collecting the kids to and from school, cooking for the family, cleaning the house, anything! Anything that can take your mind off the chart.
You must be clear with yourself about why you're taking the leap of faith and going full-time with your trading. Do you really believe this is what you're truly good at and it's got to a point where it's making you much more than your job? Or are you just trying to make some quick cash?
You must critically and honestly assess your skills, and I'd recommend you fix any issues you have with yourself before you give in that notice.
If you rely solely on your paycheck to pay your bills, mortgage, or your family's tuition fees, then strongly consider the consequences of removing that paycheck will do for you, have you been making enough, or even double than what you get paid to be responsible for this? You definitely don't want to put your lifestyle or your family's well-being on the line.
Quitting your job and going full-time is pretty severe, and there are plenty of risks involved not just in the monetary aspect. Take your time with your decision, and make sure you're ready financially, mentally, and emotionally.
Hi everyone! I see you're here because you want to develop your interest in personal finance and entrepreneurship. I'm TraderBart with A1 Trading, and I'll be talking about three books, which helped me build my millionaire mindset.
I wouldn't say this book deserves the Top 3 list; however, I believe this book should be the first you read before getting into others. It introduces financial literacy, assets vs liabilities, and building wealth from personal finance. This book was the book that changed my life forever that taught me the principles of money and wealth, and it was the first book I was able to read since leaving high school three years ago now.
The book itself is about Kiyosaki's childhood, where he had a rich dad and a poor dad. The poor dad was his actual father, and his rich dad was his best friends dad. Overall it is a fantastic book; it's enjoyable and very educational. This isn't the best entrepreneurial book out there, but I can vouch that this book turns on that "switch" in your head. It makes you think twice about the real importance of money.
Self Made is a great comprehensive book for anyone wanting to gain success from running their own business. The book covers every tier of the business development process, from start-up to exit, offering practical, implementable and global advice on the start-up process. Additionally, it features interviews with well-known entrepreneurs, entertainers and industry experts.
The book provides straightforward advice on turning a standard business into a commercially viable proposition. It advises the common mistakes to avoid and helps you create a sustainable enterprise that will flourish in success.
In this book, Ferriss discusses the years he has spent testing various entrepreneurial ventures and working regular jobs. He has worked extremely hard over the years to be able to earn $40,000 a month. He gets to say he works ‘four hours a week’ because he did the hard work for years, then learned how to delegate and prioritise tasks better.
Ferriss’ epiphany was that happiness primarily comes from time and freedom, which he calls the ‘new rich’ currency, and I could not agree more! Overall this book is fantastic, and I definitely recommend it.
The main idea of this book is building wealth, and how simple saving and spending habits will help you build a wealthy lifestyle over time, as we get a constant reminder that becoming wealthy does not happen overnight!
It explains why always watching money as it flows in and out of your bank account is very important, and for someone who is very frugal with money, this speaks volumes to me! I have been taught from a young age that a focus on cash flow is a critical block for financial success.
You'll often see traders’ group themselves into one of these two categories, and they're either day traders or swing traders. Today we're here to consider which trading style better.
This style of trading, as the name suggests, involved opening multiple trades throughout a single day. Their objective is to consistently make medium-sized profits on numerous trades and cap losses on losing trades. This could be based on any analysis, whether that is purely technical or fundamental, or a mix of both. Day traders tend not to keep any positions open overnight or throughout the weekend.
The biggest reason to be a day trader is that it does not require a large account to start with. There are thousands of examples of people flipping 2 or 3-digit accounts into tens of thousands of dollars, if not more. Depending on if you possess the necessary traits of a successful day trader like patience and discipline, there is a strong possibility of chance to catching spectacular profits in a short space of time, like the ones swing traders take multiple days or weeks to catch.
Day trading is very time intensive. It requires tight, active trading on small timeframes such as the M30, M15, and M5. This can get a little difficult and stressful; however, it is also potentially very rewarding. It requires at least some degree of focus for the duration of the entire trading session.
This trading style gets its name from traders aiming to benefit from the natural “swing” or a market. Rather than being focused on an exact time, these traders try to spot the beginning of a directional price movement, enter a trade, and hold on until the movement dies out. Swing traders keep their positions open for several days, or even weeks, if the “swing” keeps going that long.
The biggest lure to swing trading is that it targets people who do not want to spend their whole day scanning different charts looking for opportunities, but instead want to open a couple of positions per week and leave them to run until TP or SL. Full-time employees looking for an extra income source could be of interest to this style as it is not time-intrusive and can integrate with their work and leisure time. This is far less time and effort than day trading.
Swing trading is usually practiced on the H4 and Daily timeframe. This way, traders can see and try to catch the full “swing” of a market. They tend to have slightly wider stop losses, not to be falsely caught out of a trade that is going well.