It is common for traders of all experience levels to question whether or not consistent success is possible. The truth is that there is no simple answer, and it can vary from trader to trader. When it comes to achieving success in CFD trading, there are two key factors: choosing the right strategy and establishing the right mindset. Your strategies should be well researched and backtested to ensure they have potential. Your mindset needs to be one of understanding of how the markets work and what might cause losses instead of gains.
The dangerous obsession with chasing profits
While trading might be about making money, focusing solely on making profits is not the way to create consistent success. Those who fall prey to this usually enter into the industry with unrealistic expectations or misinformed ideas of how it all works. Entering into the market with an arrogant or over-confident mindset can easily lead to losses – and often does.
When you’re only focused on making money, it is not unusual to end up in a situation where you overtrade, and every experienced trader knows this is not the way to success. It is wiser to place your focus on studying various strategies and learning which techniques will benefit you best. It is also crucial to study the markets, their history and the industry as a whole. It is important to note that this should not be a one-off study. Instead, it is something that must be conducted continuously to stay up-to-date with market changes.
The danger of overtrading
The wrong mindset can lead traders to chase the market when assuming certain situations are opportunities for success. Sometimes they get it wrong, and problems arise when traders are unaware of their mistakes. Overtrading can occur when you trade too much or too often. Established trader Warren Buffett has made it clear that when it comes to trading, there should be no rush. It is all about patience and waiting for the right moment. This advice should be applied in CFD and forex trading to ensure you make the best trades possible, not the most trades possible.
Trading too much can also come into play when using high leverage. Although this can aid in making substantial profits, traders should be thoroughly educated about the risks of leverage and how to use it wisely.
The truth about consistent profits
Some traders might make more profits than losses, but even those who are considered successful experience losses. When trading CFDs, it is vital to know that you will most likely experience more losses than profits. This does not make you a bad trader; it happens even to the best traders in the industry. It simply means that being successful requires you to look at the long-term rather than the short term.
The benefit of organization
Having discipline with your trades is essential for reducing losses. In addition, traders need to master the skill of organization. Your trades need careful planning and preparation in order to reduce your risks. It’s easy to get into a habit of spontaneous trading, overtrading and other negative practices. In the event they get lucky and are successful, they will continue with these habits and potentially ruin their account. You can avoid this and form good, profitable habits by planning your strategies and maintaining discipline in these plans.
Even with this advice, trading remains risky, and there is no guarantee you will succeed. The best you can do is prepare meticulously, stick to your plans, and avoid overtrading in the hopes of profiting by chance.