Experience is a marvelous thing. Within the confines of FX trading alone, experience teaches us when to pile in on a trade set-up and when to avoid it with a ten foot barge pole. Battle hardened FX traders who get to a more advanced level have many differences to their rosy cheeked novice counterparts. Crucially, we examine which of these differences are most likely to make the difference between a growing P/L and a shrinking one.
The Big Differences Between Novice & Advanced FX Traders
1. FX Trading Technical Analysis Ability. Many newbie traders can be found grappling and struggling with even basic technical analysis. It can be a rather daunting learning curve, but a necessary one nonetheless. Advanced traders know their way around an FX chart. They are comfortable in the use of their preferred FX indicators and can spot chart patterns with a simple and nonchalant glance of a chart. FX analysis needn’t be complicated, but it does require the trader to ably command chart mechanics.
2. Advanced Traders Practice Sound Risk Management. Watch out for it next time you’re at an FX trading seminar. The moment the topic of risk and money management crops up, just about every newbies eyes will glaze over. Advanced FX traders are those who very often have been bitten in the past by slack money and risk management controls. They are not likely to repeat these errors, and take the risk levied on their available equity very seriously. Novice traders will quite often trade in a very slap dash way, not implementing the needed controls for long term equity preservation and growth.
3. Knowing A Good Trading Set-Up From A Poor One. FX trading is very much a game of patience. There will be times when a trader will need to quietly and patiently wait on the sidelines for a good trading setup to materialize. That’s what experienced traders will do – bide their time for a high probability trade to emerge. Quite the opposite for the novice who will throw money at the most marginal and dubious of FX trading opportunities.
4. Advanced FX Traders Can Nimbly Manipulate Long & Short Timeframes. It can seem perplexing to some newer traders that longer and shorter timeframes can quite easily be used in conjunction for more profitable FX trading. Advanced traders know that the longer timeframes offer more stability and a truer picture of the genuine trend. Therefore they will often use the longer timeframe charts as the basis of their analysis. However, they are also aware that the shorter term timeframes (eg the 15 minute charts) may be potently used for better market timing. Advanced traders will therefore use both of these together, to position themselves within a trade at the best possible price.
5. Advanced FX Traders Have Better Psychological Control. A huge part of successful trading is in being able to harness the right mindset. Collapsing at the feet of negative emotions such as fear, greed, frustration and revenge is what newbies do. Advanced traders who are seeing success don’t try and “get back” at the markets when they suffer the odd loss. Advanced traders understand that losing is every bit as much a part of FX trading as winning is – that’s why a tight FX trading system is so important. It simply allows the trader to trade high probability trades that will win more and keep losses to a bare minimum.
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