So who are the elite 5% of Forex traders who win and what sets them apart from the 95% of traders who lose money quickly at Forex trading? Contrary to popular belief the winners are not all computer nerds or big hedge funds and in this article, we will look at who they are and how they manage to achieve currency trading success.

So who are the elite 5% of Forex traders who win and what sets them apart from the 95% of traders who lose money quickly at Forex trading? Contrary to popular belief the winners are not all computer nerds or big hedge funds and in this article, we will look at who they are and how they manage to achieve currency trading success.

Lets look at successful Forex traders in more detail with a look at how individual traders and funds perform.

Institutions

In terms of the top 5% of traders they are not all banks, brokerages or hedge funds in fact, very few of them win. Sure there are funds that make money year after year but the vast bulk of managed funds lose. Of course you don't see all the losers because, as soon as a fund starts to lose, it gets consigned to history and replaced by another one. Managed money firms are in most instances, generating money for the house account via commission and this is a conflict of interest with the client making money when this happens. Most of the funds that make money are, independent managed funds who earn their money via intensive funds.

The generally poor performance of managed funds and the conflict of interest between client profits and house profits is neatly summed up by the following quote, written back in the 1920s and its still relevant today.

"Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. "Look, those are the bankers' and brokers' yachts. 'Where are all the customers' yachts?' asked the naïve visitor."

"Where Are the Customers' Yachts?" Schwed

So never think that banks and brokers do better than individual Forex traders – they don't and there are just as many losers in this group as in the private trading sector.

Private Traders

Most private traders who enter the market do so with misconceptions of what it takes to win and with a greedy attitude and most lose money. I have however known private traders who make money for their won accounts which would be the envy of many senior fund managers and there not all nerds or using computer generated signals at all - many are just ordinary people with no college education and using simple systems. So lets see what the successful fund managers and traders all have in common.

Common traits of Winners

There are many different ways to make money but as a general rule, all successful Forex traders will have the following in common and when you read the list, you will see why anyone can win at Forex trading.

Traders come from all types of educational background and intelligence and being cocky are not common traits. They tend to be humble and disciplined and know there is no way to beat the market – they don't fear it but they respect it and realize the market is all powerful.

The reason why intelligence is no barrier to success is simple, currency trading systems work best not complicated ones and the reason for this is simple – Simple systems are more robust and have fewer parameters to break. Forex trading is an odds market and in this type of market, clever mathematical systems are not going to beat the market so most successful systems are simple.

All successful traders respect the market and therefore use sound money management to preserve equity and they all play great defence, any trader or fund which does not will lose. Successful traders don't use high leverage and they don't over commit to one position, the focus is on the long term and equity preservation at all times.

Most successful traders DONT rely on technical analysis only – this is a myth, while charts are used the best traders also look at the long term fundamentals and try and gauge sentiment to see the bigger picture.

Most successful traders are patient and only trade high odds trades. One of the common reasons many bank and brokerage funds fail is because they over trade. In terms of clients, they think the more they trade and the more effort they make the greater their chances of success and they lose because, there taking to many low odds trades.

Final Words

Over the last 100 years the same number win 5% and same number lose 95% and this will never change. This ratio has been constant despite all the advances we have seen in technology in the period and the reason its made no difference is – markets move to the odds and in an odds based market simple systems are best. In terms of attitude its the mindset of the trader which helps him win. The successful trader keeps emotions out of his trading and trades with a humble attitude and discipline. So can you win at Forex trading?

Of course you can and always remember the basics of Forex trading are essentially simple and it really is the mindset of the trader which is the key to success. Anyone can learn a Forex trading system that can win but the mindset when applying it is the key – The best Forex traders understand this and if you do to you can enjoy currency trading success.