10 Habits of Successful Currency Traders

Here are ten rules that define the best currency traders. Many of these rules apply to traders in any market, but some are specific to the currency market. The big idea to keep in mind: No one is born with all these habits. The only way to get it is the way other successful currency traders have it – through patience, discipline and experience.
Trading with a plan
No successful trader will last long without a well-designed game plan for every trade. Sure, you may have some success in the short term, but the day of reckoning will surely come. Successful currency traders have a specific attack plan for each position, including position size, entry point, stop loss exit and take profit exit.
They remain flexible in taking profits, sometimes settling for less if they judge that is all they can take from the market at the moment, and other times they expand their profit targets if market developments turn in their favour. But they never move their stop loss orders from the original setup unless it is in favor of the position to take profit.
Predict the outcome of the event
Trading is very similar to chess, where the best players think several moves before their opponents. Successful forex traders look to future events and think about how much (or not) the market will fare in the expected outcome. They also consider potential reactions if the event matches or fails to match those expectations. Then they build trading strategies based on those alternative outcomes.
While the rest of the market is trying to figure out what to do from the event, checking the charts and redrawing the trend lines, the forward-looking trader already has a game plan and is ready to trade.
Be flexible
Successful currency traders resist being emotionally attached to positions. They understand that it’s not about right or wrong – it’s about making money. They adapt to incoming news and information, quickly abandoning an open position if events conflict with it rather than waiting for price action to drive them out of their trade.
At the same time, they are alert to new opportunities that may develop in the market and are ready to respond. To be prepared, you should keep enough margin available for additional trades. Also, they need a continuous mental model of the other major pairs so that they can include new news and events. They may not actively trade the AUD/USD currency pair, but they still know the position of the ground relative to the Australian dollar.
Prepare to trade
Successful forex traders are always prepared, at least as much as possible in a market that is open 24 hours a day and subject to random events from the distant half of the world. To stay ahead of the game, successful currency traders are prepared to:
Upcoming economic data releases in the next week to two weeks: Find out what the previous report indicated and what is expected in the next report.
Scheduled Speakers: Learn about the speakers (central bankers or financial officials), what they have said in the past, and what they are likely to say this time.
Central Bank Rate Determination Meetings and Announcement Times: Find out when they are scheduled and what decision the market expects.
Important gatherings of financial leaders, such as the G-20 meetings or the monthly meetings of eurozone finance ministers: Find out if currencies are on the agenda and what actions to expect.
Liquidity Conditions: Be aware of the time periods – eg end of the month, market close or holidays, time of day (eg European close, option expiration, or daily fixes) – when market liquidity is affected.
Unexpected events: Use price alerts to stay on top of price movements outside of expected ranges. Follow alerts to check for important news and to assess potential trading opportunities.

Stay technically alert
Even if they are not following a technology-based trading strategy themselves, successful currency traders are still aware of the important technical levels in the currency pairs they are trading. For example, they know the key Fibonacci retracement levels, where there are various moving averages, important short and long-term trend lines, and the recent major highs and lows.
You may trade based on price behavior or momentum analysis, but make sure you keep up with key technical levels as part of your overall strategy.
Go with the flow/range trading
Successful currency traders are able to assess whether the market is trending or is likely to remain confined to ranges. If they believe the market is trending, they aim to go with the flow rather than against it.
When the short-term trend is higher, they are looking for levels at which they can buy, and vice versa when the trend is down. At the same time, they understand that trends pause and correct frequently, so they are also actively taking profits at key technical points as the bigger trend emerges.
If the environment favors range trading, successful currency traders can switch gears and become opponents, selling near the top of the range when everyone else is buying, or buying near the bottom of the range when everyone else is selling.
Equally important, when they are in range trading mode, they have set an end point when the range is broken. If this point is hit, they throw in the towel without any remorse, perhaps even reversing direction and jumping on breakout.
Focus on a few pairs
Many successful forex traders focus on only one or two currency pairs for most of their trading. Doing so allows them to get a better feel for these markets in terms of price levels and price behaviour. It also narrows the amount of information and data they need to monitor. Above all, they understand that different currency pairs have different trading characteristics, and they are able to adjust their tactics from one pair to another.
Focus on gaining experience and success in just one or two major pairs before trying to expand and capture the entire market. Look at other pairs only when they are trending or trading at key levels.
profit protection
There are many aphorisms in the market about the benefits of making a profit, such as “You can’t go bankrupt at making a profit”. One of our favorites is, “The bulls and the bears both sit at the table, but the pigs are butchered.”
Successful traders take profits regularly, whether it is partial profit taking (reducing the size of a winning position) or full squaring and pulling back after a profitable market movement. Above all, when trading with money, successful traders focus on keeping what they have achieved and not giving up for a chance to achieve more.
If you don’t pull some money off the table from time to time, the market will do it for you.

Trading with stop losses
All successful traders lose money from time to time. What makes them successful in the long run is that their losses are relatively small compared to their average winning trades. The absolute key is to have a stop loss in place at all times to prevent a daily losing trade from becoming an account killer.
Nobody likes to lose money, but the best traders can accept it as part of the cost of doing business. And the only way they can accept losses regularly is to keep them small in the first place. Master the habit, and you’re halfway there.
View other markets
Currencies are not traded in a vacuum, and savvy traders monitor other major financial markets as a matter of routine. The primary markets they focus on are benchmark bond yields for major currencies (US, German, British, and Japanese 10-year government bonds), oil, gold, and major global stock indices.
On a daily basis, they look to these other markets to confirm a short-term bias for the direction of the US dollar. For example, if the dollar is moving up, US 10-year yields are going up, and gold is going down, this is a confirmation from other markets in favor of a higher dollar. If yields are flat or low, and gold is higher, the dollar’s rally may only be short-lived.
On a long-term basis, currency traders analyze those other markets for important technical levels and general trends, just as they do with currencies.
Spend the extra money on charting services that include live price feeds for those other markets.