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Development of skills like recognizing trends, reversals, understanding fundamentals, controlling risk is vital in the creation of any successful trader, yet the most fascinating aspect of all is that most novice traders know what it takes to be successful, yet they still fail to embrace these fundamental disciplines and never reach their goals. So here's the big question: If we know what we should do, then why do we still fail to do it? The answer itself is not as complicated as you think. Simply put, it's not enough to just know the rules which you should be following but rather to embrace the rules day to day and this comes from adjusting your own attitude towards trading itself. Too many novice traders treat their trading as a hobby and it sends a shiver down my spine when I hear the phrase, "I like to dabble in the markets!" What sets successful traders apart from the hobbyists is that they treat their trading like a business, enforcing a disciplined approach to their methods and techniques, with continued review and application. So let's make a quick comparison between a hobby and a business, in an attempt to shed a little light where some get it right and most get it wrong. In essence, a hobby or pastime should be for fun and enjoyment. It's something we do to let off a little steam and is usually introduced to us by a colleague or friend. After a little research on the internet, we can find some free tips or tricks and learn about what we should be doing or need to get us started. Once we have a feel for what's required, we can head off to the nearest shop to spend our cash on the best equipment to get us started and throw ourselves fully into this new venture. Hobbies can also be expensive, as we always seek to acquire the next "must have" tools to help our game or give us an edge over the competition. Considering we have spent all this time and money getting started, we then expect to see some quick results to prove that our endeavors have not been wasted…until the frustration kicks in and we decide that this new adventure may take a little more time and effort than we first realized and put it to one side. But hey, at least we can come back to it now and then for a bit of fun when we get bored!
The Busniess Model of a Real Trader: - Requires a solid plan and a disciplined structure to the definition and execution of its day to day practices.
- Accepts and embraces the rules of Supply and Demand, looking to profit from sourcing its products or services at Wholesale prices, while offering these products or services to the market place at Retail values, for a solid return on investment.
- Fully understands all components of risk and looks to manage its bottom line, accepting that small losses will come and go on the journey to achieving higher overall returns.
- Allows time for growth and accumulation, focusing on better business practices and further expansion for the future.
This doesn't sound much like a hobby does it? Any serious-minded business owner would be looking to give their new venture every chance of working out and this comes from having a sound business plan. So why should trading be any different? If you are looking to be consistent in the Forex markets, then you simply need to enforce a solid set of rules to support your goals. By implementing some logical and structured practices into his or her trading plan, a trader then clearly understands the key governing factors that determine the line between success and failure. |
