Forex Trading: The Right Mindset for Success

The mental state plays a fundamental role in any activity that can be defined as complex. And Forex Trading, as it turns out, is among these. However, it's difficult to assume the correct mental state, partly because ambiguities, misunderstandings, and false perceptions hover around this concept. In any case, whatever the expression "mental state" means, it's difficult to act on one's intimate sphere, one's beliefs, one's way of thinking. Hence the need for some clarification. With this article, we try to shed light on the concept of mental state and describe what the most suitable mental state for a trader is.

The mental state of the winning trader

The psychological sphere is predominant in Forex Trading. This is a truth that is (at least for some) counterintuitive. In the collective imagination, the expert and winning trader is a self-confident individual who faces life's challenges with aggressiveness, coldness, calculation, and rationality. Too bad the trader is nothing more than a person, and as such, is conditioned by their psychological sphere. Hence the importance of the mental state. Acting on the mental state means modifying and, in some cases, revolutionizing one's psychological sphere so that it can be functional to trading activity or at least not harm it. It's difficult to describe something profoundly abstract like a mental state in simple words. For this reason, it's more useful to let actions speak. Rather than describing what the mental state is, it's better to describe what a trader with the correct mental state does. We'll try in the next paragraphs.

They are phlegmatic

By phlegmatic, we mean, at least in this case, an individual capable of resisting emotions, avoiding them, managing them. In short, a person who doesn't get upset easily, not necessarily cold or insensitive. Well, phlegm is one of the qualities that every trader should boast. Also because emotions can harm Forex Trading activity, regardless of their sign. Both fear and euphoria, for example, can compromise the ability to make correct decisions or even lucidity. It's difficult to keep calm while trading, given the uncertainty and what's at stake. Phlegm, in this case, literally pulls the chestnuts out of the fire.

They are patient

The winning trader is never in a hurry. They face challenges with calm and patience. Of course, if necessary, they react quickly, especially in the presence of emergency situations. In general, however, they prefer slowness to thoughtfulness. Why should a trader be above all patient? The answer is simple, almost trivial: the elements to consider, to pull off a trade, are truly numerous. So before acting, it is necessary to reflect on the possibilities, actions, and consequences. Let it be clear, reflect at length (net of borderline approaches such as Scalping). Some are endowed with an innate patience. Others, if they want to succeed in trading, would do better to develop as soon as possible.

They accept defeat

The trader who can boast a correct and functional mental state is aware that Forex Trading is a complex and dangerous activity, where defeat is by no means a rare event. Indeed, for some, it is the norm. Regardless of the degree of experience and concrete results, all traders learn a small great truth firsthand: defeat is part of trading, and therefore must be accepted. This is what makes a mental state truly functional to trading activity. Those who accept defeat are able to turn the page, they don't get discouraged but rather take advantage of it (if not economically, at least morally). If your desire is to break through in trading, you should develop this awareness as soon as possible.

They learn from their mistakes

This is a corollary of the previous characteristic, the ability to accept defeat. The only way to improve, in trading as in everyday life (especially professional), is to learn from one's mistakes. Those who never make mistakes are unlikely to improve. Accepting defeat is the first step; having the ability to objectively analyze one's work, identify the mistake, and work to ensure that it never happens again are all subsequent phases. It's no coincidence that the stories of some of the world's greatest traders start from a burning defeat or a profoundly negative period. Among other things, it's a characteristic that unites successful people in general.

They are obedient

To be precise, obedient and disciplined. These concepts of obedience and discipline evoke a past in which hierarchy profoundly impacted people's lives, which seem to have nothing to do with an essentially free and independent activity such as trading. All true, if by obedience one meant loyalty to a person. In this case, we are talking about obedience to oneself. Specifically, to one's strategy, to one's trading plan. It's an essential aspect, which among other things is linked to the concept of discipline. The market is unpredictable, generates emotional pressure, especially during operations. The only effective way to defend oneself is to shift decisions to a previous phase, the strategic one, characterized by greater tranquility. However, efforts are useless if they are not followed by an obedient and faithful approach to what has been decided and planned.

They are ambitious

The trader faces a challenging test, from which few emerge victorious. The victory has a very sweet taste, both because it is truly rare and because it brings wealth. Faced with demanding challenges, whether in trading or in everyday life, only one approach is possible: determination, the will to succeed, to achieve important goals. A dejected trader, with little confidence in the future, is destined to succumb, or worse, exhaust their capital. Enthusiasm, but also the desire to compete, represent irreplaceable elements for a trader.

They are prudent

To all this is added the other side of the coin. If on the one hand, enthusiasm, the desire to do, enthusiasm, and ambition are characteristics that must drive a trader's work; on the other hand, they must march with caution, opting in the vast majority of cases, for a conservative attitude. In trading, the pitfalls are numerous and potentially fatal. It is not possible to hope for success if serious and effective precautions are not put in place, summarized and crystallized in the concepts of money and risk management. For example, a trader must know in advance how much they can afford to lose, and based on this element, plan the trade so that the loss can never, under any circumstances, be greater than their breaking point.

They are meticulous

Meticulousness is often flagged as a defect, but in some areas, it can save lives (or even just wallets). One of these areas is precisely Forex Trading. The discourse is always the same: trading means having to consider many elements, each of which can determine the fate of the investment. Hence the need to approach the market with a certain meticulousness, in a perspective characterized by a total aversion to the art of improvisation. Obviously, without all this causing a degeneration towards rigidity, which can and must be considered an evil, even in a potentially mechanized activity like trading.

They are humble

Humility is a universal value. A humble person, certainly not dejected, has a better chance not only of being liked but also of achieving their goals compared to an arrogant, presumptuous, and unduly self-confident person. Humility in trading prevents the individual from biting off more than they can chew, from sullying their trading activity with narcissism. However, it also has a high value, perhaps even more important than the first. Humble people are more predisposed to study. They are so as they are aware of "not knowing", of being in debt of skills, of knowledge. Studying, incidentally, is a fundamental activity for the trader, including experts and professionals: it allows for improvement and updating. Updating is necessary because, as much as the principles of trading are perpetually the same, the market evolves easily and frequently.

They think of the worst

Pessimism is not looked upon favorably today. It is considered on par with defeatism, that is, a sentiment capable of ruining environments, atmospheres, causing loss of self-esteem, worsening performance, etc. In this case, however, pessimism should be considered in a different light. In Forex Trading, as in any other type of trading, pessimism is a tool through which to prevent negative events, to avoid getting excessively involved in positive emotions (a very simple drift to reach, if trades are successful one after another). Pessimism, therefore, as the engine of an attitude dedicated to prevention. The "trader state of mind" is also this.