Mentality is a fundamental aspect in Forex trading. There can be no success without the right mentality. Paradoxically, a trader might be expert, educated, intelligent and also enjoy a great starting capital. Yet, without the right mindset, he would not go anywhere.
Why is mentality so important in Forex trading? Simple: it allows you to resize some risks, take advantage of favourable situations, and embark on a very profitable long-term path. The right mindset is a boost of invaluable value that elevates the trader beyond his defects. Here is, in particular, how you can recognize a trader with a good “mindset”.
He can handle the risk. Risk management is a fundamental practice in Forex trading. In fact, it neutralizes the effect of negative events, even defeats. It helps to amortize losses and mentally and concretely prepares the trader to place more effective orders.
He’s rational. A trader with the right mindset is a rational trader who knows when to go ahead and push on the accelerator but he also knows when to wait. He has a balanced personality that is not too much affected by emotions; he follows his plan in a disciplined, though flexible, way.
He has no unrealistic expectations. A trader with the wrong mindset expects much from trading, entrusts to this activity his possibilities for self-realization, is subject in an undue (and counterproductive) way to anxiety and responsibility. A successful trader knows what Forex trading can give, for better or for worse.
He does not take it too seriously. One of the worst types of trader is one who gets too serious, who enjoys absolute certainty, who always has an answer for everything, who is never wrong. Or wants you to believe he is never wrong. The trader with the right mindset is aware that bankruptcy is around the corner but, if it is the case, he receives it and cares for it. Only those who do not take it too seriously are able to admit their mistakes and learn from them.
He doesn’t let himself to be fooled. It’s a mistake that many do, especially beginners. Indeed, some are approaching Forex trading just because they have “bitten”, because they haven’t sensed the trickery, because they have believed in an easy promise of wealth. Needless to say, the trader with the right mentality, given his balanced and rational nature, easily finds deceptive advertising and, of course, avoids it.