Forex Success: 4 Foundation Core Principles
If you want Forex success, you need to build your Forex trading activities on a strong foundation. In my experience, there are some CORE PRINCIPLES you can adopt to ensure your foundation is strong and stable. If you have not yet found Forex success, is your foundation strong?
Foundation Core Principle 1: The Investor Mindset
We are Forex INVESTORS… Not Forex TRADERS. To set the stage for success, you need to adopt the mindset of an investor and stop thinking of yourself as a trader. This automatically causes a fundamental shift from thinking short-term to thinking long-term. This shift is your first step towards success.
When you think of yourself as a “trader” you are automatically taking a short term view of your participation in the Forex market. The focus is on the TRADE. And you will define yourself and your success by what happens to the individual trades you make.
- If the trade is a winner… you feel successful.
- If the trade is a loser… you feel like a failure.
Thinking of yourself as a trader creates a situation where you are going to be on an emotional roller coaster ride from one trade to the next, or one day to the next. These extreme swings in emotions causes a lot of stress… and not many people can handle the peaks and valleys for very long. It won’t be long before you abandon your trading method in search of something that makes you feel like a better trader (i.e. a trading system that wins all the time).
However, when you think of yourself as an “investor”, your mindset automatically switches to more long-term. The activity of trading stops being about the TRADE, and becomes about your overall results over an extended period of time.
- Investing in the Forex market is no longer about any individual trade.
- Investing in the Forex market is no longer about your results on any given day, week or month.
Thinking of yourself as an investor creates a situation where you are much more likely to stick with the trading system no matter what. There was a losing trade? So what, there will be other trades. Losing month? No problem, we are still up for the year. Mediocre year? That’s OK, the past 5 years have been great.
See how identifying yourself as an investor plays an important role in your success?
- If you think of yourself as a trader… you most likely fail.
- If you think of yourself as an investor… you most likely succeed.
We want you to succeed… so you need to look at Forex trading as a long-term investment opportunity.
Foundation Core Principle 2: Achievable Goals
Achievable goals are essential for Forex Investing success. Too many Forex traders set impossible goals for themselves and then embark on a never ending search for the perfect system to meet these goals. This is the surest way to set yourself up for failure.
It is better to lower your goals, make them easily achievable and OUTPERFORM,
than set your goals too high and constantly fall short!
In order for us to figure out what expectations and goals are realistic as a Forex Investor, we need to look at historical returns from other investment methods. This will give us an understanding of what profit ballpark we should be shooting for. We went over this in detail in a previous lesson.
If you remember from the previous lesson, we concluded it is pretty safe to say that investors are looking for an average return of about 8%-10% a year. And it is also safe to say they would be very happy to see 10% to 12 % returns per year which would outperform most of the investment opportunities out there.
What Does This Mean For Your Forex Investing Goals
Since serious, professional investors using a variety of different investment vehicles would be very happy with 6% to 12% gains a year, do you think it realistic to expect 100%, 200% or 300% gains from your Forex trading? Now, we are not saying these types of gains are not possible. We are only asking if you think these types of gains should be EXPECTED.
The logical answer is “NO”.
Investing in the Forex market with expectations of doubling, tripling and quadrupling your starting balance every year is just not smart. If you do, you are setting yourself up for failure. High goals like these makes it very unlikely you are going to succeed.
So, how can you practically guarantee your success? It’s simple…
Adopt a goal with lower expectations that is relatively easy to achieve.
Foundation Core Principle 3: Low Risk
One of the biggest reasons people don’t succeed as traders is they don’t understand risk properly. They focus on “making money” and therefore end up using higher risk than they should. They are thinking about how much money they can MAKE, instead of how much money they can LOSE.
Then when the loss comes along, as it will, they are shocked at how much money they lost. Add in multiple trades being placed on the same account and losing streaks… and it is not long before they have seriously damaged their account.
Or in the worst case… blown their account completely.
Using high risk not only puts your account at unnecessary danger… but it increases the stress levels as well. The thought of a losing trade can keep you up at night and lead to making erratic trading decisions. Over the long run, which is how you should be thinking of Forex Investing by now… the level of stress is just not sustainable.
The only way to survive for the long term, both financially and emotionally, is to use lower risk. When the risk per trade is low, it is easier to treat losses as just a part of doing business. It is also easier to stick to your trading plan when the inevitable losing streak happens.
Foundation Core Principle 4: Simplicity
Most people have heard of the K.I.S.S. Principle (Keep It Simple, Stupid). In a nutshell, almost everything works better when it is kept simple and complication should be avoided at all costs. If you want to succeed in Forex Investing, keep it simple.
A lot of trading systems are very complex. The belief is the more complex the system, the more indicators the system uses and the harder the system is to learn… the more profitable it will be. Nothing could be further from the truth.
The truth is, the system you use to invest in the Forex market should be simple to learn, simple to understand and simple to trade. Only by keeping things simple will you be able to stick to the investment plan for the long term. Forex Investing is a Marathon Race… not a Sprint. Keeping things simple helps you go the distance.
- If the system takes years to learn… it is unlikely you’ll EVER learn it, and less likely you’ll MASTER it.
- If the system is open to too much interpretation… you’ll start blaming yourself for getting it “wrong”.
- If the system forces you to be available 24 hours a day… life, work, sleep, relationships, etc. will get in the way.
- If the system chains you to the charts for hours… you’ll start wondering if all the time and effort is “worth it”.
The easier it is to keep up with your Forex investments, the more likely you are to succeed. Therefore, you need to keep things simple… so it remains easy.
How To Turn This Lesson Into Pips
- The first thing you need to do is adopt the Core Principles explained above. Adopting these principles sets the stage for Forex success. You need a strong foundation from which to launch your Forex investment business. So, that is the first thing.
- Next, you need to use a PROVEN trading strategy YOU CAN TRADE. Obviously, you need a proven trading strategy. But a lot of traders forget a winning trading strategy is worthless unless you can actually trade the strategy perfectly. This is where most traders fall short. (They find winning strategies but cannot trade them correctly and therefore turn a winning strategy into a losing strategy).
Here are some proven trading strategies that are easy to trade perfectly:
UBOAT FX STRATEGY: This is a strategy I give away for students of my Forex SOS Course. It is profitable over the long run and very easy to learn and trade. Take the course, learn the strategy and join the ranks of profitable Forex traders. Learn more about the Forex SOS Course & Uboat FX Strategy and claim your discount
sRs Trend Rider 2.0: This is a proven strategy with over 6 years and 1512 trades worth of proof created by Vladimir Ribakov. But more importantly, Vladimir provides advanced trading tools that makes it simple to trade the strategy perfectly from trade 1. Read My Full Review Of sRs Trend Rider 2.0
Daily Forex System: As the name suggests, this is a Forex trading strategy that trades on the Daily time charts. This means the strategy can be traded in less than 5 minutes a day. Even though it only trades once a day, there are plenty of trading opportunities over 10 recommended currency pairs. Learn more about the Daily Forex Systemhttp://tradetheforexmarket.com/forex/forex-success-4-foundation-core-principles/http://tradetheforexmarket.com/wp-content/uploads/2016/03/Forex-Success.jpghttp://tradetheforexmarket.com/wp-content/uploads/2016/03/Forex-Success-150x150.jpgBlogFeaturedForexforex core principles,forex foundation,forex success,forex training,free forex training