When I started trading forex I realized that 90% of the people who get into trading currencies are here because they think they are going to become rich. Whether you trade stocks, bonds, futures, options, forex, or any other flavor of investments, your goal should not solely be to make money.
When I started trading forex I realized that 90% of the people who get into trading currencies are here because they think they are going to become rich. Whether you trade stocks, bonds, futures, options, forex, or any other flavor of investments, your goal should not solely be to make money. I know you’re saying, “but why am I investing if it isn’t to make money”? Your goal should be to make money, but how you get there is the real goal you should keep in mind. Let me explain.
If there is anything that I learned from the unavoidable global recession and the meltdown of the S&P 500, NASDAQ and DOW over the past few months, it’s that investors are more vulnerable to market havoc than ever before. Only the best traders in the world have the stomach to turn a nasty bear market with extreme volatility into a profitable period in their trading. Traders right now are either crashing and burning because this market has exposed their weaknesses and lack of preparation, or they are flourishing because they have put in the time and effort to prepare themselves for a situation like this should it occur.
The title of this post is what I am going to focus on today:
Great Traders Gauge Themselves by How Many Good Trades They Make, Not How Much Money They Make
Many forex traders that I know are having a hard time trading these markets because of the extreme volatility and pip swings, which does not bode well for long term traders. Traders get stopped out by their stop losses with swings that were not occuring a year ago. These traders can either fold their trading style or adapt and flourish. I have personally done better lately because my style is built off of catching short term reversals, which are plentiful during volatile markets.
With my most recent trading I have really focused on making great trades, not trying to make great money. I have been doing this because I know that if you focus on making great trades, the money will undoubtedly follow. Too many traders get caught in the trap of making goals that are only monetary values. There is no point in me posting that I would like to make $5000 a month trading if I don’t feel comfortable doing it. Every trader should have set rules as to what defines their optimal trade setups. My trading style might give me 30 trades in a month, or it could give me 5. Should I try to make the same $5000 a month with these different circumstances? Absolutely not. When traders try to reach these unrealistic goals, they begin to make trades that are not within their system and way out of their comfort zone.
Since I have started aiming for making great trades I have been on a winning streak and the money has come for me. I have no monetary goals. Just like I don’t have a daily goal. Your goal should always be to make the money when the trades are right for you, and stay out of the market when there is nothing to play. I cannot stress enough that this is the number one reason that most traders fail. Needing to trade because you feel like you’re missing out will blow up your account in a heartbeat.
The take home message here is that there are plenty of people who temporarily make money in the markets by looking to get rich. I would love for you to introduce me to a true great trader who doesn’t track whether the trades they make money on were great trades that were in sync with their system. Then you can show me a leprechaun and a unicorn and I’ll stop trying to educate my readers. Have a great day, and go make a great trade.