The Little Guy Can Succeed - Becoming A Professional Currency Trader
Many retail traders assume three things about professional currency traders that are simply not true
. First, they assume that almost every trade that professional currency traders pick is a winner. Second, they assume that it takes a lot of money to be a professional currency trader. Finally, they assume that professional traders are secretly doing something that can't possibly be done by retail traders.None of these assumptions is correct and in fact we see time and time again that it isn't the number of winning trades he can pick, how much trading capital he has, or his privileged access to contracts that makes the difference - it is how the professional currency trader behaves.
1. Professional Currency Traders are NOT Geniuses
They are not any smarter than a retail trader nor do they able to predict the market with 100% accuracy in forex trading. This is because most professional currency traders are also like most retail traders out there do not know where the market will be next. Most retail traders falsely believed that the professional currency traders know where the market will go and the answer is NO, they don't! A professional currency trader knows that placing an opinion about the market is a dangerous thing to do. At the end of the day, the market is always right.
A trader who forms an opinion about the market gets only one thing- that warm fuzzy feeling of being right- while missing the fact that the success of a trade comes from the ability to manage the trade itself. The constant insistence that you must be right about every trade you pick is a common mistake of retail traders. The approach to being right about the market direction over being profitable rarely leads to success.
In fact, it does quite the opposite, it pits the trader against the very system he hopes to make money from. The constant struggle ends up clouding the trader's judgment and driving him to treat the market as an adversary that must be battled as opposed to an ally that he is sharing opportunities with. Professional traders can find themselves on the wrong side of the trade as well focused on getting the market right as opposed to being profitable.
2. Choosing Being Profitable Over Being Right
A trader who forms an opinion about the market will hold on to a losing trades and still think that he is right. Traders who trade like this thinks that they are smarter than the market and they can out-beat the market. The fact is the market is always right! All throughout school, we are rewarded for picking the right answer, whether it's multiple choice or free response, as long as we have the right answers we will receive a grade A.
This behaviour translates into a the need to be right in the market otherwise the trader's ego will be for a beating. Adding more contracts to a losing position known as averaging down is a strategy usually performed by most amateur traders to proof that they are right about market. However, averaging down a bearish market is a behaviour doomed for failure.
The decision to be profitable over being right can lead a trader into making a different set of choices about how he interacts with he markets. By deciding to be profitable, plans are put in place to protect himself from one trading potential- loss- and to ensure that his investment account live another so that he can participate in the next market opportunity. Trading to control the most probably outcome loss, and letting the profits take care of themselves.
3. Trading With the Right Amount of Capital
Trading currency with a leverage of 500:1 is too high a leverage even for professional currency traders. This is far beyond what the average retail trader should be working with when he gets started. This high levels of leverage are a leading contributor to a retail trader's rapid demise. There is no right amount of leverage for retail currency traders however it is encouraged that you first trade with 50:1 or 100: 1 leverage with a starting capital of US $ 20,000. If your starting capital is below $20,000.
You have no choice but to use a higher leverage - increasing your chances of losing your money fast. Understanding and manage a balance of risk and leverage is what the professional currency traders do. Retail traders must understand leverage and apply risk management and money management strategies to limit their risk exposure while using the right leverage levels to aid your trading performance.
Becoming a professional forex trader is the dream of many and for most it remains just from the day you first start believing you can become a professional currency trader. Almost 90% of the part time traders want to become full time professional currency traders in the future. Professional currency traders are not any different from retail traders. What we always thought of them are wrong.
They do not possessed the ability to read the market. Neither are they always right all the time. They made mistakes from time to time and their trading accounts also experience draw-downs. However, they have a different mindset and so they act differently from retail traders. With the usage of technology, right knowledge, and right amount of practise; a retail trader can become a professional traders because they aren't any different from them. The Little Guy Can Succeed!
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