November 12th, 2012
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What Skills Do I Need to Become a Forex Trader?
The forex markets – or foreign exchange markets – provide traders with the opportunity to buy and sell a wide variety of different currencies. The idea is to buy cheaply and sell on at a profit, as minute by minute changes in the exchange rates affect the amount you can buy and sell. It is not for the faint of heart, neither is it for every type of trader. While some love the idea of trading in the forex markets, others shy away from it and prefer to trade in stocks or shares instead.
So the question is this – do you have what it takes to become a forex trader, and a successful one at that?
Are you disciplined?
You will need to be if you are to apply a particular system in order to make money with it. Many forex traders fail because they are not disciplined enough. There will definitely be times when things do not adhere to your trading plan and you must be disciplined enough to keep pressing ahead regardless. Veering away from your plan can lead to losses you hadn’t bargained for, so make sure you are able to maintain a good degree of discipline.
You must be able to control your emotions
It helps to be disciplined with your emotions in much the same way as you are with your plan of action. There is no actual emotion in the forex charts. Money has no emotions. Therefore you must not add your emotions into the mix either. This might sound a little odd but it can make all the difference between a good trader and a bad one. If you lose money on a trade you will not get it back by losing your temper with the charts and ripping them up. You will only do better by focusing on your methods – and that takes patience and controlled emotions.
You need to be able to read the forex charts
Pips, candles, bid, ask, spread – forex is full of terminology and you must be able to develop an in depth knowledge of it. This can be gained over a short period of time, but it is one thing to know all the terms and quite another to understand them and how they play their part in the business of forex trading.
It is also a good idea to understand the risks that are involved with forex trading. This is one of the riskiest and most challenging areas to try and make investments in. Indeed, some 95% of those who take part in the forex markets are left with a loss at the end of their efforts. Clearly, it takes a very special person to start making money with forex, much less to make a career out of it.
Some people become independent traders and work in the forex markets on their own, rather than having an official job. But they are the lucky ones – and they are extremely talented as well.