TGIFF #001: Winning Habits of Successful Traders

What is the difference between winning traders and losing traders? 

I’m not talking about winning the odd trade; I'm talking about being a successful trader - a trader that consistently generates profits month in month out, as opposed to a trader that is hit and miss, inconsistent with their results and is simply struggling to maintain positive momentum with their trading.

It’s quite obvious that successful traders do certain things differently as compared to unsuccessful traders. 

No earth-shattering observation there.

 In a nutshell, winning traders think and act differently than losing traders. Their mindset and activities are enormously different from 95% of traders who ultimately fail.

So, what is the difference? What gives them a competitive edge over the large majority of unsuccessful traders?

Before I share with you some winning habits that you can and should implement to bring significant improvements in your trading results, you are going to have to look at yourself.

You are going to have to be totally honest with yourself and ask, “Am I getting the results that I desire?”

If the answer is no, you’re going to have to be prepared to start doing things differently.

You have heard this before, but it is worth repeating until you start doing it. 

Remember - If you always do what you have always done, you will always get what you’ve always got.

If you are not happy with your trading performance, keep in mind that it's time to change the way you do things.

I'm hoping that you will not only read this, but also start applying some of the trading habits I'll be sharing with you, setting yourself up for consistent profits.

Habit #1: Focus on the process, not your account size

I know having a large account size is the goal or dream of many traders. Fair enough! 

However, the reality is your account size really doesn’t matter.

The only thing that matters is the process. 

If you focus on the process, in other words if you focus on trading properly and mastering that, your account size will consequently grow. 

Forget about making money fast. In fact, forget about making money at all. You should only focus on the process it takes to make the money.

In today’s world, we are conditioned to want everything fast. But forex doesn’t work like that.

The only way to build up a large trading account is by starting with a small trading account and over time, mastering your trading edge, mastering the process you take when you trade.

 Only when you do this will your account grow.

Keep in mind that if you can't make money on a $1000.00 account, you are not going to make money on a $100,000.00 account. It’s as simple as that.

 Start with a small account, master your trading edge and your account will gradually grow.

 Your only focus should be on getting good at the things you do to make the money NOT on the money itself.

 Don’t be consumed with making money fast, instead fixate on trading effectively and winning - this way you will make money faster.

Habit #2: Apply Pareto’s Principle

The pareto principle commonly known as the 80/20 rule states that 80% of effects come from 20% of causes.

How can this principle be applied to trading?

At the foundational level, it simply means 20% of traders make 80% of the money.

So, it would stand to reason the 20% are not doing what the 80% are doing.

What are the 80% doing?  

They are doing what everyone else is doing. This, in common tongue, is called the herd mentality. And that’s where the problem arises.

What you must realize is just because everybody is doing something, it does not imply that it is the right thing to do. The herd loses money. Your goal should be to separate yourself from the herd mentality and cross over into the 20%.

As the old saying goes - “It’s crowded at the bottom, there is a lot of room at the top”.

The forex market is contrarian by nature. The traders who have phenomenal success are the ones who go against the herd, these are contrarian traders.

1. For an instance, a contrarian trader is not afraid to buy at new highs or sell at new lows (this is the opposite of what the herd usually does). A market often goes lower or higher than we think. In such cases, it’s the contrarian trader who takes advantage of these huge moves that occur in a strong trending market.
   
   On the contrary, the majority of traders lose because they come up with all sorts of reasons why the trend won’t continue and try to bet against the trend.
2. Another example of a contrarian trader is that they take the opposite side of the market (crowded market). Let’s say that a pair is in a downtrend. The price has hit a historical low and starts to bounce (retrace back up).
   
   What do you think the herd will do? Firstly, the herd will convince themselves that the price cannot go any lower. Then, as soon as they see the price moving back up, they jump in.
   
   On the other hand, contrarian traders wait for price to retrace to a significant level. Once it does, they do the opposite of the herd - sell again. They know most people get the market moves wrong, so they take the opposite side using a signal to confirm an entry.
    

Habit #3: Rely on Swing Trading or Position Trading

By now, you know my views on day trading. I avoid it like the plague for good reason. 

It is significantly more difficult to make money being a day trader than a swing trader, which basically means we stay in positions anything from a few days to a few weeks.

 We attempt to ride the momentum and profit from it, as opposed to ducking in and out of the markets countless times every day chasing tiny gains. 

We focus on the higher time frames because they carry more weight and are far more lucrative.

Successful traders take a low frequency high impact approach to trading.

What do most traders do? They trade a lot and lose money.

What does that tell you?

• Remember what I said about being in the 20%. You want to trade less if you want to be profitable.
• Remember there is a cost every time you take a trade (spread). If you are in and out of the market all the time, it is chewing into your trading account because of the cost of doing business.

If you were to look at your last year’s trading history, how many trades did you take and what was the spread cost? 

I’m sure you will be surprised to know how much money it cost you just in the spreads alone.

If you are in the market more than you are out of the market, you are slowly digging your own grave. If you want to make money, dial down the frequency of your trades.

Day traders tend to be cluttered, they rely on multiple indicators and knee jerk reactions. They really do not have any clarity. They are under the impression that they must be in the market all the time to make money.

Whereas, successful traders don’t have a cluttered approach to their trading. They know exactly what they are looking for, and they are patient because they know the market will always provide them with an opportunity to exercise their trading edge with complete clarity and confidence.

Habit #4: Do nothing most of the time

Successful traders do nothing most of the time. They know that keeping their powder dry (preserving their trading capital) is vital. When an opportunity presents itself, they have capital to trade with.

Beginning traders do not understand that not being in the market is a position, in fact more often than not it’s the best position. 

To excel at trading, you need patience and discipline, only take high quality setups and actually enjoy being smart enough not to be in the market.

My clients and I don’t trade that much. But when we do, we believe in them because they meet our predefined criteria. 

Remember you do not need to trade a lot to be profitable.

Here is a quote from Bill Lipschutz, one of the best traders of all time: 

“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money”.

Habit #5: Have wider stop losses

As you know, I advocate the use of wider stop losses. Since we trade the higher time frames, we need wider stop losses.

 Successful traders use wider stop losses because they know the natural fluctuations of the market can take them out before their positions get a chance to take off.

I have written articles on the importance of having wider stop loss placement. However, the bottom line is you need to give the market room a breath.

 A lot of new traders have tight stop losses so they can trade a larger lot size. This is a critical mistake.

You should have a wider stop loss and a smaller lot size.

It makes no sense at all to trade a larger lot size if you keep getting stopped out, because your stop loss placement is too tight.

Habit #6: Anticipate something happening

 One of the things I teach my clients is to be an anticipatory trader.

• This means we anticipate the market instead of reacting to it.
• This means we are sitting on the side lines ready to go when an opportunity presents itself. 

Successful traders have their charts set up at the beginning of the trading week. They have the most relevant event areas identified, and as mentioned earlier, they are anticipating a price action signal to occur in strict accordance with their trading plan.

This keeps you accountable and stops you being a reactionary trader.

All we do then is wait for the ideal opportunity and time to strike.

CONCLUSION

Of course, this is not an exhaustive list of the winning habits successful traders have. However, if you begin to implement these points, you will find yourself well on your way to having a decent shot of becoming the trader you aspire to be.

Becoming a successful trader isn’t necessarily difficult, but one thing is crystal clear. If you don’t think and act like the winning traders whom you’re competing against, you will get chewed up and spat out faster than you think.

It’s time to stop being naive and start thinking differently if you want to have a real shot at making money as a trader.

Ask yourself one question - if you do whatever everybody else is doing and think how everybody else is thinking, what will you get?

You will only end up like them, and as traders, we need to be thinking and acting differently from the ‘herd’ to gain an edge and become successful. 

 I hope the tips and insights I have shared with you give you a better understanding of some of the ways professional traders think and act so that you can separate yourself from the herd.

I hope you have found this newsletter helpful.

I’ll see you again next Friday.

Till then, keep trading and have a wonderful weekend!

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1. Beginners Fast Track to Forex Domination: If you are a beginner, looking to learn forex trade from scratch to have a massive source of income, I have just the perfect course for you: Enroll in the course now!
   
   
2. The King of Forex Monthly Membership: If you are further in your journey but struggling with your trades, simply copy my exact setups, watch me breakdown trade analysis each week, learn from my own training modules and chat with me LIVE every month! Join 1000+ traders on an upward trading journey!