To ensure consistent results while trading in the FX market, traders must have a basic understanding of how the industry functions, while also developing skills tailored for the current financial conditions. There has never been another time in history during which access to the markets was so simple and common, like these days. That’s why traders need to stay on top of their game, and here are 4 of the top traits good traders have nowadays.
#1 The ability to think rationally under financial pressure
Although scalping trading strategies differ from one trader to another, risk taking is a common denominator when people engage in the market. As a result, the ability to handle financial pressure is a long-term useful skill you should work on developing.
On the back of rising inflation, the US Dollar continued to rise throughout 2021 and the trend does not show any signs of weakening in 2022. Traders need to have the courage to act in these challenging circumstances and that can only be achieved by constantly venturing out of your comfort zone. A professional trader can make rational decisions even when the markets don’t perform as expected, because they have the confidence to trust in the system they’ve developed..
If you’re already past the introduction to forex phase, you should know this activity involves a lot of diligence. It’s not enough to have a well-rounded trading strategy. You should stick to a set of clear rules at all times.
Beginners might lack discipline and constantly search for reasons to bend the rules, trying to justify a subjective view on the markets. In reality, such behavior might lead to painful mistakes. When operating in an uncertain environment (given nobody can know for sure how prices are to move in the future), the only factor providing stability is a solid trading regime.
#3 A flexible mindset
The FX market might be one of the most liquid available. as currency valuations are contained. Despite that, traders should see more volatility in the future according to Bloomberg, which is why you need to be flexible enough to cope with changing market dynamics.
When there is risk appetite, market participants favor currencies such as Euro, Sterling, Aussie, or Kiwi. Rising fear changes the order flow as traders search for safety in the USD, Swiss Franc, or the Japanese Yen. It is entirely your job to figure out when these turning points are occurring and adjust market exposure accordingly, without wasting too much precious time.
#4 Reading price action objectively
Technical analysis might be based on numbers and models, but even though traders should rely on these fixed factors, subjectivity unavoidably becomes part of the equation. It does not matter where you want the price to go, you need to figure out when an order flow imbalance is expected and trade in the dominant trade direction, whether your initial analysis confirmed it or not.
In an environment that you cannot control, a great deal of humbleness is vital. Reading news in the media is another factor that can alter your perception, so keep an eye on that as well.