Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

10 steps of successful traders

Author: Martin Moni
Martin Moni
All publications of the author

You’ve probably heard that almost 90% of all traders in the world lose money, but even among the remaining 10%, only about 5% are truly successful, and the rest are just scraping by with meager profits. The question now remains, why do so many traders lose money, and what makes just 5% of them so successful and profitable?

Well, we’ve already looked at the 10 most common mistakes among traders, and those mistakes are responsible for most of the losses experienced. Now let’s see what the most successful traders do that puts them in the elite 5% segment of the trading world:

1. Take your trading career seriously

Trading in the Forex, stocks, futures, or binary options markets has become very easy to do nowadays. All you need is a computer or smartphone on which you download one of the many Forex trading platforms, sign up with one of the many Forex brokers, deposit some money and you’re good to go. It doesn’t even have to be a lot of money, just a few hundred dollars before you’re trading just like any other trader in the world.

The ease with which a person can trade is a great thing, after all, it’s how a simple guy like myself was able to become a trader. On the other hand, it has also created a sense of complacency among traders who take the simplicity of trading as a sign of limited risk. With this attitude, some traders will take their trading career as a side hustle which can be done occasionally without much thought.

Successful traders do not have this kind of mentality, and they take their trading very seriously. Every trade is carefully considered, real-time Forex charts are deeply analyzed and trading strategies are implemented. This doesn’t mean that all successful traders don’t have other jobs, but those who do take their trading just as seriously, if not more seriously, than their other jobs. Every successful trader puts in a lot of time to perfect their trading and, even when the markets close over the weekend, they still go back to analyze all their trades and plan for the week ahead.

Simply put, to become part of the 5% of successful traders, you have to take your trading very seriously, and not treat it like a hobby or curiosity as this kind of attitude is exactly what leads to massive losses.

2. Make a plan and stick to it

It can be tempting to try something new simply because you saw it being discussed online or mentioned by a friend. Sometimes, these kinds of insight can be a blessing, and traders rely on one another for information about the markets, but you shouldn’t hop from one strategy to another without consideration.

There is a reason Forex brokers offer demo accounts – for you to try different strategies and find one that works for you. Successful traders always have a plan set before every trading day that they execute without fail, and keep doing the same. For example, one might plan to go long on a currency pair once it breaks a resistance level, or if there is positive news about the concerned base currency. A successful trader with such a plan would ignore all other noise from other markets until their plan came to fruition.

Before starting your trading day, you should have a clear plan if you intend to become a successful trader. Besides just getting into a trade, you should have a clear exit strategy., since this is what determines how much you gain or lose.

3. Choosing the market and system best suited to your personality

There are various markets on which you can trade right now. The Forex market has always been around, although now it is even easier to access; others like the futures and stock markets were once limited only to high-value individuals, but now they can be accessed by anyone. With such a variety of markets to choose from, it can be confusing to choose one because there will always be pundits of one market or the other touting their market to be the best.

To become successful, do not get caught up in all the hype or numbers thrown around by traders who claim they have made so much money from a certain market. What you need is to try them all with a demo account first on your own and figure out which suits your personality. Every market has its unique characteristics, but all successful traders have specific markets to which they stick. As an example, take a look at the structure of any hedge fund or investment bank, there will always be separate departments dedicated to different markets, and traders are only placed in the department that best suits their personality.

4. Proper management of risk

Another factor in becoming a successful trader is to stay in the game for as long as possible. It is very rare and even impossible to become successful with the first few trades you make – you have to crawl before you can walk. This calls for patience, and it may take a few months before you get there, but it also requires that you be very careful with your capital. If you lose all of your investment, you won’t be able to become successful, so be very careful with how much you risk.

The recommended percentage of your capital to risk in a single trade is 2%, then it would take 50 consecutive losses to wipe out all your capital, which is very rare, or impossible if you have a good trading plan. Even with a small capital in your account, you should still minimize how much you risk. Traders with a small capital take bigger risks to try and match the profits made by other traders, but this is just going to cause you pain. Measure your success by the percentage of profit earned rather than the amount of profit. In this way, a $20 profit on a $200 account would be just as good as a $1,000 profit on a $10,000 account since they are both 10% profits.

Finally, never forget to use a stop loss to minimize losses on losing trades, and when you do, do not move it because you believe that somehow the markets will turn around and fulfill your wishes. Accept a small loss and move on rather than watch as you are stopped out.

5. Control your emotions

Since trading is a technical field, it very much relies on the individual’s state of mind and attitude. You will have to accept this fact and be willing to control your emotions if you want to become a successful trader.

When a trade goes well, and a trader makes a profit, there is an adrenaline rush that pushes them to keep going, often making them take bigger risks. On the other hand, if a trade goes bad and causes a loss, then the trader is either discouraged and stops trading or enraged such that they make riskier trades in an attempt to cover the loss.

Both of these are natural emotions, but successful traders know to ignore these emotions and become almost robotic in their trades. Do not let your emotions guide your trades, but instead consider every step logically, regardless of how the previous trade went.

6. Be patient

With the markets running 24/7, there should be no rush to make a trade. Successful traders know that there are always missed opportunities, but plenty more to come. By keeping this in mind, you will not jump into any trades without careful consideration. Except for those traders who scalp, most traders will sit in front of their computers for hours without making a single trade, just waiting for the perfect opportunity. It is this kind of patience that makes a truly successful trader, and you had better be prepared for the same.

7. Learn from your mistakes

Even the most seasoned and successful traders still make mistakes, and it would be folly to think you won’t make any mistakes just because you have had a lot of practice. What sets apart successful traders from the 90% of losers is how they get out of a losing streak, and what they do afterward.

After the markets close on Friday night, it’s tempting to go out and have fun but to become successful, you should use this time to analyze your performance. You can keep a physical journal, but most trading platforms will also provide one. Go through each of your trades from the past week, finding out what led to your winning trades and what caused your losing trades. Through this analysis, you become a better trader over time and finally become successful.

8. Learn as much as you can about the markets

In trading, just like in any other discipline, knowledge is power. You stand no chance of becoming a successful trader if you don’t master the markets you trade. So, learn everything you can about the financial world and internalize the information such that you won’t even stutter when confronted with a question about the markets.

You’re already on the right track, reading this article, but don’t stop here, check out our other articles to learn all you can. Keep an eye on the Forex calendar to find out about any upcoming announcements and research every trading term in detail. For example, we mention various terms like leverage, spreads, pips, margin levels, etc. but do you know what they mean? Believe me, it’s these little things that determine how successful you are going to become, and you need to become a master in them all.

Albert Einstein said, “If you can’t explain it to a 6-year-old, you don’t understand it yourself”. Go ahead, test yourself, what are futures?

9. Choose a broker who caters to your needs

Be very critical when choosing a Forex broker since a wrong choice will be like shooting yourself in the leg even before you make your first trade. Begin by confirming that they are regulated by reputable Forex regulators to ensure that your money is safe. Then look through Forex broker reviews to find out what other traders have to say about their services. Typically, you want a broker who has been in business for a long time and has received generally favorable reviews over the years.

Finally, depending on your preferred trading system and market, confirm that they can adequately cater to your needs. The best Forex ECN brokers will be best suited for a long-term trader with substantial capital, but scalpers can choose from our STP Forex brokers list to find reputable brokers. The choice of a Forex broker has more to do than just your trading strategy since it is the broker that provides access to various markets. Therefore, your chosen broker should be able to provide you with access to the instruments you would like to trade.

10. Make technology a friend

Some people prefer to stick to the old methods of operation, like how Hillary Clinton says she won’t let go of her Blackberry despite improved smartphone technology. To become successful through trading, you will have to leave this mentality behind and take advantage of the improved technology. This means upgrading your computer, smartphone, and internet connection so that they can handle and deliver quotes in time.

If you can also get your hands on an automated system or trading robot that makes trades on your behalf, then do it, but don’t forget to put in some work yourself. There are also plenty of YouTube channels and live webinars that offer information that could be useful, make sure you use them all. Remember, it’s all about learning all you can about the financial markets to become a successful trader.

Final Thoughts

Most of these lessons have been learned the hard way because the markets can be brutal and unforgiving. All you will have to do is persevere, but if you follow these 10 steps, then you won’t have to experience the hardships the rest of us have had to endure. Sure, you will still suffer some losses, but they won’t be as bad, take heart in the knowledge that practice makes perfect, and count any losses as the cost of learning.

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.