Forex Trading: Beginner or Expert? Take This Quiz to Find Out

Forex Trading is a very challenging activity, where competitiveness reigns supreme. Almost everyone knows this, and those who don't learn it the hard way once they make their debut in the market. After all, the early days are the most difficult, with an incredibly high dropout rate. Fortunately, no story is already written, and potentially everyone can make it. It's enough to... Behave well. That is, trading according to the written and unwritten rules that the experts themselves respect, those who have made it. The most arduous step to take, in fact, is precisely that from beginner to expert trader. Some, relying on a solid training path but also on a certain dose of natural talent, take months; others take years. The fact is that sooner or later this transition is made, because the alternative is simply throwing in the towel, perhaps after having lost money or wasted time. The transition does not happen suddenly. Rather, it is quite gradual. You often find yourself in limbo, halfway between amateurism and professionalism. You wander in a sort of Serie D. Therefore, it is useful to understand if you are on the right path to complete the transition by analyzing yourself and your work from the outside, with a kind of examination of conscience. In this regard, the small test we present below may be useful. It consists of a few simple questions. If you answer yes to all of them, then you are already professionals, expert traders.

Are you making money?

It is the minimum requirement to call yourself an expert. It is also, to tell the truth, the most conspicuous one. It's logical: if a trader is making money, they are at least competent, and it is likely that they can be defined as an expert... Or incredibly lucky. It turns out, however, that luck is a very relative concept in Forex Trading, and in any case, it is unthinkable to rely on fate. It would border on the field of gambling, an approach that is the exact opposite of that adopted by professionals. Incidentally, even if this requirement leaves no doubt about its role in determining a trader's degree of experience, it is really difficult to achieve. This is the unpleasant truth: most traders close the year at a loss. According to the most pessimistic estimates, as many as 85%. Hence, the legitimacy of this data to prove a trader's degree of experience.

Do you have a trading system?

To be clear, having a trading system is not necessary for trading activity. Especially if it is carried out at a non-hectic pace. This is the case, for example, with swing trading, which plays on the long term. In that case, as in many others, it is sufficient to adopt some money management precautions, produce the most precise price analysis possible, and operate. However, the trading system is highly inadvisable, especially if you do intraday or multiday trading (but not swing). In this case, the TS proves to be a fundamental tool to manage to tame market uncertainty, to always and in any case confer the rational element in opening and closing positions. Now, creating a TS, but also adapting someone else's, is difficult. In fact, there are many elements that compose it. It follows that those who operate with a TS and manage to respect its dictates in a disciplined manner are certainly closer to the concept of professionalism than to amateurism. If this TS is effective, i.e., produces winning trades, this is certainly an indication of competence.

Do you practice effective technical analysis?

Those who do Forex Trading know how important technical analysis is. In fact, it can be compared to a torch that allows you to see when everything around is dark. It sheds light on the near future of prices. To be clear, it does not predict them precisely (that would be too much to ask) but it certainly indicates their direction. Technical analysis, in fact, is the tool through which market signals are received. Now, everyone practices technical analysis. Otherwise, one would remain confined to an approach similar to gambling. What distinguishes the beginner from the expert is the "how". What characteristics does the technical analysis done by an expert boast? Well, it might be a bit intuitive, but that's how it is: it is less complex. The most effective technical analysis is the one that makes use of a limited number of indicators, if possible easy to read. A beginner, in an attempt to do well, puts a lot on their plate, uses many indicators. An expert goes for sure, and uses two, three, four indicators, aware of their effectiveness with respect to their way of trading.

Can you read an economic calendar correctly?

This requirement concerns not technical analysis, but fundamental analysis. The main tool by which fundamental analysis is practiced is precisely the economic calendar. It signals the events scheduled day by day, in some cases reporting very useful information about analysts' estimates, previous data, and above all the degree of importance. Reading the economic calendar is only apparently easy. The reason for this "intrinsic", almost hidden difficulty lies in the rationale with which each event is assigned a degree of importance. Well, it is a "generic" degree of importance, valid a little for everyone and a little for no one. The expert trader considers this element up to a certain point. They know, regardless of what is written in the economic calendar, whether an event is important to them or not. Also because, for example, the Australian inflation figure is often marked by a medium degree of importance, but it is clear that if the trader invests in the Australian dollar it is an essential market mover.

Do you know how to wait?

The aspect of waiting is controversial, also because it is counterintuitive, at least according to common sense. In the collective imagination, in fact, the winning trader is a true market animal, able to frenetically seize all opportunities. Well, it is a purely cinematic portrait, which also winks at a certain literature, but which in reality is nothing more than a prejudice. The winning trader, rather the expert one, can be compared to a sniper. They "shoot" only if they really have the target within reach and, in general, they hit the mark. Therefore, if necessary, they know how to wait. And they do it with calm and serenity, without this activity weighing on them in the least. So, if you have already experienced waiting, and indeed it is part of your modus operandi, you are probably closer to professionalism than to amateurism. Not that developing this skill is simple. Also because the market is capable of putting pressure at any moment, even when you are not in. Probably, the feeling - often false - of missing opportunities generates an emotional upheaval equal to the stress of those who, instead, have an open position.

Do you react well to defeats?

This is a fundamental requirement. It concerns the psychological sphere, which is never considered enough. The trader, even the most expert one, should not be considered as a cold, calculating, and rational economic actor. They are human in the true sense of the word, therefore crossed by emotional upheavals. What separates the competent from the mediocre is the ability to resist, to manage emotions. Particularly strong are those that follow a defeat: sadness, mistrust, pessimism, self-doubt, desire for redemption, anger. Well, they are all physiological but at the same time harmful emotions. A good trader reacts to defeat in a constructive way. They absorb the blow, register the error, understand where they went wrong, get back up and continue to operate according to the rules they have set for themselves. Above all, they know perfectly well that defeat is part of the game. They accept it as an inevitable fact, however containable. Because the truth, unpleasant but irrefutable, is that everyone - at least sometimes - loses, even the most winning traders.

Do you have a cool head?

We are still in the field of psychology. In this case, however, it is not a matter of keeping negative emotions at bay, but of neutralizing the true uninvited guest of trading activity: stress. It is a fundamental, unavoidable component. However, it is relatively easy to deal with. The rules are those that should be respected during any activity, in everyday life as well as in professional life, where something is at stake. Transform stress into a resource, rather than considering it an impediment. After all, stress is a physiological response to a dangerous situation. It does good. To do this, you need to keep a cool head, that is, lucidity. To achieve this goal, it is necessary to gain experience. Some, however, are endowed with natural coolness and this certainly gives them an advantage. In any case, if you are able to keep the helm straight even when the sea becomes stormy, when contingencies arise, it is likely that you can call yourself "trading experts".

Are you able to change on the fly?

It is paradoxically one of the toughest requirements to meet. Also because it puts self-confidence into play. Those who have decided to operate in a certain way, pursue a given approach, and put their trading system into practice, it is as if they are investing in themselves. For this reason, changing is difficult: it would be like betraying oneself, disavowing oneself. Yet, it is absolutely essential to possess this umpteenth arrow in one's bow. Why is it necessary to know how to change? Simple, because the market changes. Even if you were to ideally adopt the best of all possible trades, sooner or later it could become obsolete, and represent a valid answer to a wrong question. Therefore, it is necessary to change. Often, changing on the fly, perhaps when technical analysis has proved fallacious and the position risks losing money and not being so profitable. Changing is difficult, not only because of the psychological scope of the change, but also because sometimes improvising is necessary to stay afloat. For those who are used to discipline, it is very arduous.