If you are asked why you are trading the markets, your answer will most likely be to make money, embrace a better lifestyle and enjoy the general freedom that comes with trading. You are not alone as these are some of the things that drew the attention of people to forex trading in the first place.
There is nothing wrong with having those reasons as your goals for trading. They are all achievable goals if you are able to make it into the group of successful traders who are able to close most trading years with consistent profits. However, to achieve these goals, you need to focus on the things that will help you achieve them instead of on the goals themselves. Your success in trading, hinges heavily on whether you are making trading decisions each day for the right reasons. For many traders, the focus is on the wrong things, especially in the early days of their trading careers.
Do You Love the Forex Trading Process or Do You Just Love the Money?
It is important to ask yourself if you are genuinely in love with the process of trading, from learning the markets to understanding what the charts are communicating and to the individual buy and sell decisions. Are you really enjoying it all or are you just battling along in the hopes that you will become rich quickly? For many new traders, it is just about the prospects of riches. They dread making buy or sell decisions and their hearts quickly sink with one losing trade. Looking at the charts alone, give them anxiety. This is wrong.
Trading is virtually the same as all endeavours in life generally. You need to love what you are doing if you are going to reach your goals. If you are don’t love what you are doing or if you are in it for the wrong reasons, there is a huge possibility of failure. How will you know if you are happy with all aspects of trading and making a career out of it, or whether you are simply in love with the potential money?
Signs of Trading for the Wrong Reasons
Trading with money you can’t afford to lose
Trading with money you can’t afford to lose is a top sign that you are too focused on the money. This is because risking such money means you are focused on making money fast and recouping your investments. In this situation, you are not considering the possibility of losing the money and will most likely lose any semblance of trading discipline in the event of any kind of loss.
Little to no thinking about a trading plan or strategy
A trader is only as good as the trading strategy. If you don’t have a trading strategy or if you are not focusing properly on making sure that you are following one while trying to make profits, you are fighting a battle you will lose. The profit is the end result of following a carefully planned strategy. You will most likely end up profitable when you put designing and following a strategy first. If you are just looking to make profits in a scatter gun manner, you will most likely end up losing.
Making plans of what to do with phantom profits
While there is nothing wrong with planning how to spend your money, you need to ditch such thoughts until you have actually made the money. Ambitions and goals are always good to have but you need to draw a line when you find yourself constantly wallowing in fantasy. Interestingly, people that exhibit this behaviour usually do not think of what a loss would mean for their trading account. As you are planning to buy a new car with your compounded profits by the end of the month, consider what will become of your trading account if you lose 3-10 trades in a row (which is very common in this market).
Trading without a reason
If you are at a stage where you just want to be in a trade for the sake of it, you are probably chasing the endorphin high that is synonymous with gambling or a trading addiction. You trade for no good reason, even late at night before bed, pressing some buttons for the gamblers endorphin release, you need to be in a trade. If you end up trading all the time, entering one as another one closes out, you don’t want to trade anymore, you NEED it. This is trading addiction and I can promise you that it will very quickly drain your bank account.
You get enthralled by the next biggest trading thing
Stick to major markets, major Forex pairs and major stock indices and commodities, don’t trade every market under the sun, this will cause you to over-analyze and over-trade and lose money.
So What are the right Reasons to Trade?
You should trade because you love trading, plain and simple. You must love the process of trading, not only the dream of the end-goal, or you will never achieve the end-goal
You’re becoming methodical and well-structured in your approach, making plans and keeping notes and spreadsheets, you’re taking this seriously. Once you start doing things like this you know you’re on the right track. Being methodical and having a trading plan and keeping a trading journal in spreadsheets of your trades is something traders do who truly enjoy the process. These things keep you accountable and help develop proper trading habits and routines.
You live and breathe markets, it’s what you do, it’s who you are, every precious moment of free time you’re reading a post on a blog like the one you’re reading now or you’re reading a classic trading book like The Market Wizards or Trading in the Zone or perhaps studying chapters in my price action courses, you’re studying charts religiously, even if you’re out and about.
Your family and friends don’t understand you any more, the conversations have turned into things people can’t relate to, you feel alone, isolated, and feel desperate to find others who think the same way.
You love self-improvement. Trading, more than anything else, is about self-improvement. Show me a successful trader and I will show you a person successful in other areas of his or her life. Intense discipline, focus, passion, patience – these are the ingredients of LIFE success not just of trading success.
You are competitive, you like the competition. The idea of competing with millions of other traders and putting yourself into the that top 10% who are making all the money – drives you more than anything – it’s inside of you – it’s NOT JUST about getting a lot of money it’s about the self-confidence and the feeling of knowing you are better than all those other traders and you out-competed them. It puts you in a very small group of upper-echelon individuals and is a true accomplishment, one you’re dying to achieve.
You simply love markets, you love charts, you love business and entrepreneurship, you love studying what drives the world economies and you find yourself watching CNBC even when you’re bored.
If you want to get fit and healthy and achieve your optimal body composition, you must fall in love with the process of working out and eating healthy, because if you don’t fall in love with it all, you will never continue to do the little things day in and day out that lead to the type of body you want. Same thing in trading. To get the money and the cars and houses and the life you want, the life that IS possible from trading, you have to love the process, the little things, the details, otherwise you’ll never stay committed to the discipline that is required. As they say, the devil is in the details.
To succeed at trading you must let go of the need to control the outcome. You must trust the process. You must trust your intuition. You must trust yourself. You must fall in love with the process if you want to get the results you’re looking for.
Don’t worry if you’re not yet feeling this quite yet or doing the things I discussed above, just stick with the plethora of inspirational and educative lessons on my blog and then study the chapters in my professional trading courses as well as follow along with the daily market analysis I post for members. You will soon find yourself enjoying your trading and hungrier for knowledge day by day, momentum builds momentum, and you must turn your desires into habits. Habits are what makes someone successful and when you start by developing the proper trading routine and stick to it, it will turn into a habit that leads you down the path to trading success.