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Ten habits of successful currency traders

A while back someone listed some habits for successful traders – forex or otherwise. Here they are, with some of my own comments included.

habits

Here’s another post motivated by something I filed away for future discussion some time long ago – like Ten rules for risk management from the other day. Sorry, I can’t recall from where these habits were taken. If you know, definitely pass it along so I can provide due credit.

Ten Habits of Successful Currency Traders

  1. Trading with a plan
  2. Anticipating event outcomes
  3. Staying flexible
  4. Being prepared for trading
  5. Keeping technically alert
  6. Going with the flow/trading the range
  7. Focusing on a few pairs
  8. Protecting profits
  9. Trading with stop losses
  10. Watching other markets

I think #1 is an absolute must. In fact, if well constructed your trading plan will encompass a number of the other things on the above list. It will address what you trade (#7), how you trade (#6), what you consume by way of information (#10), your exit strategy (#8, #9), and your overall preparation for trading (#4).

There isn’t a ton I feel like I need to add, but will say that #2 is worth giving a bit more consideration.

If done properly, anticipation can be a very good thing. It lets you prepare in advance for probable developments. That, in turn, allows you to have a good plan in place for reacting to what happens.

Where you need to be cautious is when anticipation leads you to do things before you should. Overly excited or anxious traders can fall into the trap of anticipating a certain kind of price movement that would generate a trade entry signal, for example, and trading ahead of the signal actually happening.

This tends not to work out very well, as while part of the time the signal will come to pass, other times it won’t. That means you’re not actually trading according to your system or method, which tends to be recipe for disaster. That circles things back to #1. 🙂

By John

Author of The Essentials of Trading

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