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What skills do foreign exchange traders need?

Nick Goold

Successful foreign exchange traders have different methods, markets, and styles. However, they all share a common set of skills. Trading is not simply a matter of following entry/exit signals; it is necessary to understand and acquire the required skills to generate profits consistently. 

Here are ten skills needed to be a consistently profitable trader.

1.Confident with numbers

Traders need to become confident with numbers to obtain the information necessary for trading, such as support and resistance zones, the relationship between profit/loss and pips, and technical analysis. While it is not required to understand complex mathematical formulas, traders need to perform calculations quickly and accurately.

2. Market analysis ability

Traders must develop market analysis skills to find entry points with a high win rate and risk-reward ratio. There are two main types of analysis methods: technical and fundamental. It would help if you used both to determine why the market is moving and market trend. Successful traders spend time analyzing the market, even when not holding positions to find trading opportunities. Also, if you understand how news affects the market, you can determine if your trading strategy is best suited for the current market.

3. Concentration

Traders need to be focused. They need to gather information on whether their trading entry criteria are satisfied and where they will place their exit orders. Also, they need to be aware of any important economic indicators that will be released. Making a mistake in the number of lots or forgetting the profit and loss stop-loss points is dangerous. Trading will distracted can lead to losses. Therefore, turning off the TV, music, or anything else that reduces your concentration can improve your results.

4. Self-control 

Self-control is essential for traders. The more calmly you can follow your trading plan, the more likely you will be profitable. The feeling of wanting to trade impulsively happens to all of us, but it is essential to control that feeling. Develop a high level of self-discipline to avoid gambling trades. Most importantly, follow stop loss and accept your losses.

5. Keep a record of your trades 

Professional traders keep a record of their trades. Recording your trade results and mental state will help you understand your weaknesses and refine your trading techniques. In addition to recording the price and time of entry and exit for each trade, save charts and write notes. 

6. Decision-making skills 

Traders make many decisions, including entry, exit, and stop loss. Although the trading plan will decide many things in advance, the trader must make decisions while watching the market. You can refer to other traders' methods and ideas, but you must make all your own decisions about when and how to trade. Professional traders not only have the ability to analyze the market but also have the skills to make quick decisions basis new information.

7. Patience 

Patience is essential to trading. Patience is vital for the time it takes to wait until the entry point and then reach the profit target. It can take a long time to build the skills required to trade profitably, and you may become impatient and frustrated. However, by making improvements little by every day, you can be a successful trader.

8. Self-confidence

Traders need to have self-confidence. For example, you may feel anxious when holding a position, no matter the profit or loss. However, if you have analyzed the charts carefully, and entered the market according to the plan, focus on being relaxed. As you gradually accumulate successful trading experiences, you will gain confidence.

9. Consistency

Sometimes in trading, even unplanned trades can yield significant profits. However, if you repeatedly trade inconsistently, you will eventually incur losses and could lose all your previous earnings on one trade. Therefore, a consistent approach to trading is necessary to ensure continued gains. Careful trade planning and mental control are essential.

10. Ability to be flexible 

One factor that makes trading difficult is that the market is constantly changing. For example, a trading strategy that works today may not work tomorrow. Therefore, traders need to have the skills to be flexible and adapt to the market. The ability to sense market changes and adjust one's trading strategy to market conditions is one of the skills that professional traders need.