7 Extremely Important Qualities About Pro Forex Traders That You Didn’t Know

& why over 90% of new traders quit within their first year of trading.

I remember the first time I saw those sweet, sweet profits staring right back at me from the MT4 app on a phone screen.

7,000 dollars and some change in a single live trade. Bouncing within a range of a few hundred dollars. It’s just too bad that it wasn’t my trade account, it was the account of another guy who claimed to be making 40k+ per month trading. Was this guy the real deal? Was he the “professional trader” I could learn from?

That number made me a bit uncomfortable because I’d never seen a number that big on a SINGLE trade. I told him he should close the trade, he disagreed and let it ride out through the night. The next morning he closed the trade $8,300 in profit. Phew. Bullet dodged, he came out on top. I’d never seen anything like it, so I decided to learn from the guy. I later learned he was being truthful, he was making close to 40 G’s a month, it’s just that he wasn’t being fully transparent… He hadn’t consistently made 40k per month for a long period.. just over the last 3 months.

Call those “3 lucky months.”

At the time I had no clue. I saw big numbers, I saw his last 3 months and so I figured he must know something I don’t. At the time I was still new to trading, had made some good trades and some really poor trades, but I was sitting on some money from my previous business and wanted to pay tuition, I wanted to become a Pro Forex Trader.

This guy seemed legit. You know what he taught me? He taught me bad habits, poor risk management, how to over-leverage myself, and how to make 120k in 3 months and then how to LOSE it all in a few stupid trades.

He did just that and I followed suit. Hard lessons learned. It was then I realized I need to learn from the RIGHT people. I need to learn from true pros who trade for institutions, banks, and move BIG money. There was only one issue.

Where do you find an Institutional Trader that’s actually willing to divulge their secrets?

Because these are the people who make money in the Forex Markets. It’s not like you can just walk into a bank at wall street and say, “Hey, do you mind if I sit in with one of your top traders and peek over their shoulder?” The only way to know how they trade is to work for the bank or to become one of them. I wasn’t about to go to an ivy league school and get a degree in finance and getting a job wasn’t something I was interested in doing…

So.. I had to learn everything about Trading the Forex Markets like the Professionals do through trial and error. I’ve had to sift and forth through information online and then test to see what works and what doesn’t. I’ve watched countless hours of Youtube videos from Forex Traders who sound like they know what they’re talking about and don’t, and then I’ve found that there are nuggets off truths that shine like gold and work well.

I want to share with you what I believe those Institutional Traders trade like and how you can avoid trading like a total newbie who loses their money and quits within the first year…

NOTE: This article has less to do with actual tactics, analysis, or indicators, and how MORE to do with trading psychology. The psychology of a trader and their ability to keep their cool is 80% of the battle and everything else accounts for 20%. So if you want to become pro, you need to pay attention to your mind space and focus on psychology.

Without further ado, let’s move onto number one.

1. Profitable Day Traders Make Up a Small Portion of All Traders – 1.6% in the Average Year

I guess this one is less of a quality and more of a fact. Getting reliable stats about the Forex Markets and those who trade it is very difficult since the companies that have it usually keep that data for their purposes, but I did the best I could to find accurate and reliable data on this statistic and based in my personal experience I would say its true.

After having been around the space for close to 5 years now and after having seen hundreds of traders come and go, I would say that closer to 1% of them have remained legitimately profitable for an entire year. And the percentage of those who remain profitable year after year is an eversmaller group. The percentage up above of “1.6%” comes from a study done through the years of 1992 – 2006 by a guy named Brad Barber. The number may have changed a bit over the last decade but I’m willing to bet the Forex Market competition has become more fierce and fewer people come out alive.

2. They’re Typically Wrong More Often Than They Are Right

My first cautionary sign when it comes to who I should trust as a Forex Trader is when they tout their percentages. Like when they say, “I’m right 75% of the time, 85% of the time.” That’s when I know it’s unlikely they’re any good.

Not because they’re lying but because those stats just aren’t congruent with what I’ve witnessed from some of the MOST profitable traders. Pros are typically really patient with their winning trades and enormously impatient with their losers. And here’s another interesting thing I’ve witnessed. Pro traders, the really good ones, are usually wrong more often than they’re right, they just know how to cut their losses well and not get emotional. So even if they’re only right about the direction of a market 30% of the time and wrong 70% of the time, they’re winners FAR outweigh their losers in terms of profits and losses. This image captures this phenomenon perfectly.

3. They NEVER Add to a Losing Trade

Many investment companies use a trading strategy that’s referred to as “dollar-cost averaging.” It’s a strategy used in 401k portfolios, in the stock market, in the ETF markets, and more. Essentially, its a way to mitigate losses and risk by buying a stock or contract on the way down in the hopes that when it reaches the bottom, you’ve significantly increased your position and didn’t lose much. So for example, if you bought Apple at 220 bucks and next month the price drops to 190, you would add to your portion and buy more there. Then again if the stock dropped further to 150 you would buy more. Hopefully, the price would reach a bottom and start to tick up and give you back some gains while experiencing minimal losses. I mean a company can only go to zero right?

This may work in the stock market if you’re investing in rock-solid (and usually older) companies. But this strategy WILL wreck you in the Forex Markets. In Forex, markets can zip right on past “zero” so to speak. People tend to assume that a Forex Market pair can “reach a top or bottom” and nothing could be further from the truth.

Forex market pairs can swing in one direction for thousands of pips before moving back in the direction you want. So if you’re wrong. cut the loss fast, don’t buy or sell in the same direction at a bigger size. That’s the easiest way to blow your account.

4. They’re consistent but not foolishly consistent

We’ve all heard that Professional Traders, create their own set of rules, trade with a plan, and don’t deviate from it. But what if the plan no longer works. Or what if the plan works but then some crazy news comes out and it would be better to deviate from the plan for a moment to preserve profits or capital.

Here we have a situation where using common sense and discernment through experience is equally important as having a set of rules. The best way to describe rules is that rules should be strongly heeded guidelines but should NEVER Supersede common sense. So be consistent with your rules but don’t be so consistent that you don’t keep the main thing the main thing. Taking profits of the top and moving stop losses if market conditions change.

5. They Know Who They’re Trading Against

This is kind of a backward rule because most Forex day traders, especially the new ones, think they’re trading against the big banks, institutions, and anyone with large money to move around. And to a degree, that is right. Most traders trade against the big money. Guess what the result is? LOSING.

The only thing that comes with trading against big money is losses. There is no other way around this. You can’t out bet them and you can’t move markets as they do. So don’t Instead trade with big money. Big money is your friend. Your new enemy is the old you, the spot trader who needs to pay tuition and learn what you learned.

That’s the only way you succeed and remain profitable over a long time in the Forex Markets. Trade exactly how the banks do which trades in the OPPOSITE direction of overall market sentiment. This means that if the majority of individual spot traders use the same indicators and same support/resistance lines, they will all see the same thing. If the majority of individual spot traders believe the market will move up, then it’s likely the big money will move the markets down.

6. They Know There are ZERO Shortcuts to Becoming a Profitable Trader

This one is pretty self-explanatory. But truly, as crappy as this may be to hear for you, there is no one indicator and no one strategy to get good.

Let’s say for example you love the sport of football so you study it. You learn every play, read every book, have watched all of the tapes, and done your research and education. But now it’s time to play. You get out on the field and get your ass handed to you. Why? You knew more. You’re more educated. Simple, you haven’t developed the muscles yet. You never put your knowledge into action.

The same is true of Forex Trading. You need to put in the time and develop your trading muscle. That’s the real secret to success here. And in a market with trillions of dollars on the line, the ante is BIG and competition is really mean, you need to get good which can only be done through hard work and practice. Don’t look for a “miracle indicator” or a quick fix. Just try new things and practice until something works for you and it sticks.

7. They Don’t Try to MAKE SENSE Out of it All.

The other day I was having a conversation with my friend who trades stocks about the current economic state we’re in. And rightfully, he was a bit pissed because it doesn’t make sense. Why is the stock market climbing? Why do indexes like the S&P500 keep going up when the job market has crashed, when restaurants are going under by the droves and major legacy companies are filing for bankruptcy. Why are some companies reaching new all-time-highs and ridiculously overvalued? Why are companies that should be growing so suppressed?

My answer? “I don’t know. Maybe manipulation? Maybe people are greedy? Maybe everything’s honest and people ‘bought’ the dip. I don’t know, but here’s what I know: you aren’t here to make sense of it all. You’re here to make money.”

And I’ll leave you with that. Should the price go up on good news? Of course but then sometimes it doesn’t. Should the price drop on bad news? Of course, but sometimes it doesn’t. Quit trying to “be right” and confirm your own bias. Just learn to make money.