Being in the Forex trading industry for over a decade now, I realised that in general, traders can be classed into three main categories, i.e. the Risk Taker, the Systems Trader and the Beginner Trader.
The Risk Taker
These traders believe in the ‘High Risk, High Return; Low Risk, Low Return’ principle and are therefore convinced that in order to achieve good returns, a lot of risks must be taken. For most of them, taking a lot of risk would mean going in and out of the market with high frequency, and trading a large number of lots. They believe that the more risk they take, the more successful they will be. These traders are almost certainly destined to fail eventually despite making large returns from time to time. The market somehow has a way to punish high-risk takers who do not calculate, control and manage the risk of every single trade they entered into.
The Systems Trader
These traders believe that by following a set of rules, they can succeed very well in trading. As such, they are constantly shopping for automated trading systems that allow them to be totally hands-free in their trading. Many of these traders are highly intelligent people who might even be able to program their own automated systems, but are often paralyzed by their own analysis. They very much believe in the existence of a ‘Holy Grail’ strategy, which can be programmed to take trades successfully without much effort from the trader itself. Such expectations are unrealistic in the dynamic world of trading.
The Beginner Trader
Most of the students in my training program belong to this category. They are often totally clueless and uninformed about what Forex trading is, but tend to be more successful after the program. The reason for this I believe, is because they do not know enough to complicate the strategies being taught, and they tend to be more risk-averse and therefore less prone to breaking the rules in the trading strategies and more stringent in controlling their risks.
Ask yourself which kind of a trader you are. Each of us has a certain pre-disposition, i.e. a certain pattern in our personality that determines our behavioural patterns and risk profiles. Having seen many traders who do not achieve their desired success, I realise most of them tend to belong to the first two categories, i.e. those who either pay no respect to the risks in the market, or those who are too unrealistic in thinking that the market behaves like clockwork.
Of course, many beginners will someday fall into one of these two categories if they are not properly trained and guided. Whether you are a novice or have some experience in trading the Forex market, I suggest you break free from the limiting influences of the first two trading styles depicted above.
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