Forex Trading Expert Advisors (EA or automated trading system) and Custom Indicators (CI) for MetaTrader Platform.

Becoming a successful Forex trader is a process, and a long one at that. It seems that around every corner there is a new method, technique or even a new element to our mental game that needs to be considered.

This process produces an endless number of “signs” along the way that can help you determine whether you’re on the right path or not. However, many of these signs come along when least expected, causing them to be forgotten or even overlooked completely.

The extensive list below serves as a compilation of 50 of the signs that I noticed along my own journey in the Forex market that began in 2007.

So grab a hot cup of coffee or tea, find a comfortable spot (this might take a while) and enjoy!


1) Indicators become an unnecessary burden

It seems that indicators are to Forex what candy is to a candy shop. Every trader wants one, wants to combine two or more of them or wants to create and sell them; they are everywhere.

Unfortunately, the vast majority of these indicators are complete garbage. But even for the few that could potentially give you the upper hand, they simply aren’t necessary. After all, indicators only show you what price action did in the past.

By trading based on raw price action only, you relieve yourself of complicated indicators and you get the benefit of being able to trade what is happening right this instant. You also get another benefit in the form of greater real estate on your charts, allowing you to actually see what is happening – imagine that!

This isn’t to say that all indicators are “bad”, but trying to use them without first learning to trade raw price action is like trying to build a house without a foundation.


2) You no longer think in terms of right versus wrong

Right and wrong as a traderWe live in a world of right versus wrong, where everyone loves to be right and those who are wrong typically love to convince themselves otherwise.

This way of thinking is disastrous for the Forex trader. Perhaps it’s why trading is arguably the toughest career in existence.

The best thing you can do for your trading is to forget about being right or wrong. Instead, think in terms of probabilities, always knowing that technical analysis only serves as an idea of what is likely; it will never be able to tell the future.


3) Patience becomes another word for profits

Staying patient as a Forex trader is the number one key to success. It allows you to trade only the best setups, but more importantly it enables you to be able to preserve your trading capital for when it really matters.

The most important aspects of anything in life are often the most difficult to master, and staying patient as a trader is no exception. However knowing that the market will be here tomorrow and accepting the fact that it only takes one good trade per month to make it in this business will certainly help you with your patience.


4) You remain flexible no matter what

When you first began trading, you probably assumed that making money was tied to knowing what will happen next. If you know a market is going to go up, you buy. If you know a market is going to go down, you sell.

But knowing has nothing to do with it.

It’s always important to have a directional bias, but it’s just as important to remain flexible in that bias. If the market invalidates your original idea, listen and take notes. Never assume that you know more than the markets!


5) Profits are no longer your top priority

Survive as a Forex traderIt doesn’t matter whether you’re a Forex trader or an owner of a restaurant chain, profits are always welcome. Unfortunately for the aspiring trader, this desire for profits tends to blind them to the more important aspect of trading – sustainability.

Your ability to survive should be your top priority. Because if you run out of capital, you won’t be around to take advantage of profitable setups when they do come along.


6) The daily time frame takes on a whole new meaning

The daily time frame is boring, right?

That’s what most individuals think when they are just starting out in the Forex market.

And you know what? They’re right!

But what these individuals don’t realize is that boring is a good thing. The daily time frame may not be the most exciting time frame to trade, but it is certainly one of the more profitable time frames to trade.

By eliminating a lot of the “noise” you get on the lower time frames, the daily chart makes it much easier to discern what is favorable and what is not. It is also much more user-friendly when it comes to identifying key support and resistance levels.


7) You know that quality trumps quantity, always!

This is a great topic to discuss after mentioning the daily time frame. One benefit of trading from a slower time frame is that it becomes easier to identify quality setups. You are also less likely to get sucked in to the trap of overtrading, a common and devastating pitfall for many Forex traders.

As time progresses, you realize that it only takes one or two favorable trade setups per month to make good money. There is no need to trade twenty times in a month because quality will always trump quantity when it comes to trading.


8) A favorable risk to reward ratio is no longer optional

Have you seen those trading strategies that promote a 150 pip stop loss to gain 10 pips?

Perhaps you know of someone who has tried a similar method or maybe you even went down that path. Regardless of the situation, you know that this type of risk to reward ratio is terribly skewed in the market’s favor.

The path to consistent profits is paved with errors. One of the most common is using a massive stop loss to feel “safe”. However the truth is that using such an unfavorable ratio leaves you vulnerable.

The key to success is to always use a risk to reward ratio where your potential profit is at least twice your risk.


9) News events are viewed as a catalyst rather than an opportunity

Market news

Everyone wants to “trade the news”. After all, the largest price swings happen immediately following a high-impact event. Therefore this must be the best time to take advantage of the volatility and make some money, right?

Wrong.

Trading the news is an extremely risky way to manage your trading capital. Some would even call it reckless, and I can’t say I disagree.

The news should never be thought of as an opportunity to make money in and of itself. Instead, it’s far more prudent (not to mention lucrative) to view news events as catalysts that can confirm or negate already-established trade ideas.

By doing this, you are able to respond to the movement strategically rather than chasing or hoping that the resulting price movement bodes well for your position.


10) Disloyalty becomes a good thing

In all areas of life, we strive to be loyal. We also desire the same in return from friends and family as well as our pets.

But to the Forex trader, loyalty can be a disastrous trait to have. It’s loyalty to a directional bias that causes you to maintain that bias even when the market has disproved it. It’s also loyalty that causes you to hold on to an unfavorable position longer than you should.

By showing a consistent disloyalty to the market, you allow yourself to be open-minded and flexible to any price action that goes against your convictions. It’s this flexibility that allows the successful traders to pull an unfavorable position in an instant or even reverse their position if the situation calls for it.


11) The process becomes more important than the profits

process of becoming a successful traderEveryone wants to make money, and who can blame them? After all that is what attracts everyone to this business in one way or another.

But profits are easy. Anyone can put on a trade and essentially have a 50/50 chance of making money. There is nothing difficult about that.

What is not so easy is the process that must be endured in order to achieve consistent profits.

The successful Forex traders know this, which is why they continue to beat on their craft every single day. They know that the journey is never over and that only consistent profits can keep them in the game – a feat that can only be achieved through a process of learning.


12) Boring becomes your new best friend

Who likes boring? Nobody likes boring, right?

I love boring. It’s boring that puts money in my trading account every month. It’s boring that allows me to do the things I love to do besides trading (like writing this very post).

You see, good trading is boring. A combination of the higher time frames and extreme levels of patience make this so.

But that’s okay. At some point you have to ask yourself – did I get into trading for the excitement factor or did I do it to make consistent gains?

If you’re like me and your answer is the latter, then boring is the way to go.


13) You enjoy being flat

Say what?

In case you don’t know, the term “flat” in the world of trading refers to having no open positions. It’s another way of saying that your trading capital is all in cash.

This is a difficult concept for many traders to accept. That could be because it goes against the conventional wisdom that “more of something is better”.

With trading it’s completely the opposite. You need to practice patience in order to hold out for the very best setups. Also, by staying flat you maintain your emotional stability, a key factor when it comes to identifying favorable setups.

Only once you’ve learned to love being out of the market will you be able to make money in the market.


14) Win rate? What win rate?

True or false, you need to have more winners than losers in order to make money in the Forex market?

Answer: false.

Was that a trick question? Maybe, but that depends on which school of thought you come from.

Most advertisements for signal services or trading robots (also called Expert Advisors) claim a ridiculously high win rate, usually north of 90%. But the idea that you need to maintain that kind of ratio is nonsense. Whether or not those services are even telling the truth, well, that’s another matter altogether.

By always maintain a favorable risk to reward ratio and staying patient, you can have a win rate as low as 50% or even 40% during some months and still make money. That is the key to trading success, not attempting to achieve a flawless win rate, which only serves as a way to appease your ego.


15) Maximizing gains becomes more important than finding trades

Briefcase overflowingSay you own a single-location restaurant in an up-and-coming part of town. That restaurant is only producing about 50% of its potential gross revenue on an annual basis as there is a ton of additional floor space that isn’t being utilized.

As the owner of that restaurant, which would be easier, making use of the existing space to immediately increase revenue by 50% or take on an entirely new location in a different city?

Of course the clear answer is to expand on what you already have. The same idea applies to trading, whereby the potential gains of a single trade idea can be maximized while maintaining the initial risk.

Who wouldn’t want that?

This is achieved through a technique called pyramiding. The idea is to strategically add to a position as it begins moving in your favor. This way of maximizing gains is much easier than trying to find an entirely new, and favorable, trade idea.

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