The Right Mindset to Start Trading

Ever since the pandemic hit our everyday lives and people started losing jobs, the thought of a side hustle came to most of us. People started looking up for handsomely paying jobs that requires less time and effort. Even on social media and forums, most of the advertisements or articles were about forex trading and how people were sustaining their livelihoods in the pandemic. Few traders have been performing exceptionally well in the forex market and people are drawn to big profits but it is much more important to understand why they are successful while most of the people struggle.

If you nail down the qualities of successful traders and analyze what makes them unique, is their mindset. The common misconception that a master-level strategy is a key to forex trading is not true, it is certain habits that define the performance of a forex trader.

Let's get deep down into how to start with forex trading

The right mindset to start trading involves knowing what are the basic and necessary prerequisites to trading. One must start with educating himself as it is the best and the only way to familiarize himself with the concepts related to the market. Trading inculcates multiple concepts. One should start with basics, stick to them and then move on to formulating strategies.

The next step is to have a clear mindset and do proper research on what you will gain from forex trading and what you will risk losing. It is better to have such clarity sooner than later as markets are not that forgiving - Every mistake incurs a financial loss. Focus on what to read, what to trade, what time to trade, and how to trade.

Formulating a strategy - is the next big step that a trader faces when he starts trading. No one master strategy will work in the market and it varies from one person to another. So, find the strategy that suits you best. But do not buy or sell an instrument on just a whim. Some traders gain from the above-mentioned approach for the first few weeks which gives them false confidence that they are born to trade, but in the end or after some time they end up in the category of 95% of the traders that lose money in the market. This happens because in the beginning, the profits accumulated are small, which builds the trader’s confidence to trade with a higher lot size. But one big loss ends up wiping all the previous gains and sometimes even the entire account. So, the point here is to research the markets, build up a strategy and test it thoroughly on a demo account.

At last, of course, you need funds that will be used for trading. The fund size can be small or large depending on a person’s financial capability. However, it is better to start with a small investment. It is just like shopping in the supermarket. If you decide to try out a new product, what do you do? Do you buy a small pack or a large pack? Of course, you try the small pack. This is also how psychology should be for a person starting to trade. Take things slow first and see how you progress instead of rushing towards big profits. It is tough resisting the urge to earn big profits, but this mentality is what needs to be tamed before you get too deep into the markets.

Once you are done with gaining knowledge, formulating strategy, and experience in the market. Now is the time to focus on the mindset.

Discipline and Consistency

Discipline and Consistency are the two psychological traits that are engraved deep down into the minds of seasoned traders. They have clear objectives on every single trade and are familiar with the risk associated with it. All the trades are analyzed and executed without hesitation as they know what they will gain when the market moves in the desired direction. But also, they are not hesitant to close out their positions if the market does not support their analysis. There is no emotion attached to any trade. Such kind of discipline is hard to find, and this is what differentiates professional traders from most of the traders.

Skillful traders focus not on big profits but consistent profits stretched over a longer term. Small and consistent gains over the long term are always better and sustainable than large gains over the short term. This is because large gains in the short term always involve over risking which at some point leads to blowing up of the entire account. The key point here is to not over risk. Most of the successful traders take only a certain percentage of risk per trade. Generally, it is set between 1 -2% of the account balance. So, if you have a $2000 account, ideally you should only risk $10-$20 on every trade. This makes a lot of sense because the market is not 100% predictable. You will always have some losing trades or even a series of losing streaks. Even some of the seasoned traders have them. The goal is to survive the downfalls and start again. If you lose more than 50% of the capital or blow up the account by over-risking, it will take more time and effort to make up for the loss.

In addition to that, consistency comes from practice and constantly learning from your own mistakes. Keeping a trading journal to note down mistakes and how you could have avoided them helps prepare for the future. Mistakes can be anything like entering the trade too early, exiting the trade too late, you panicking and closing the trade too early or in loss to only see the price reach your desired level soon after. All of this helps to condition your mind and react better when history repeats itself.

The market is all about probability

No matter how efficient a trader you might be, it is important to understand that the market is all about probability. Sometimes it works in favor and sometimes against you. If you open a trade at any instance, you have a 50% chance of either winning or losing trade. Technical analysis, fundamental analysis, or any other kind of analysis is used to increase the probability of winning. But even the perfect analysis might not work in some of the cases and it's completely okay, it doesn’t mean your strategy is wrong, it’s just that it didn’t work for that particular trade. You can always increase the probability of winning, but you can never guarantee the win. This is something that seasoned traders know very well and is the reason they keep their cool even when they lose a well-analyzed trade because they know by experience that one or two losses do not define their overall journey as a trader. Losses are a part of trading, and everyone must experience them as they are just as important as profits. And like I said before, make sure to analyze your losses, so that when history repeats itself, you can approach the situation in a better manner and avoid losses.

Go for Withdrawals

When you become a profitable trader make sure to take withdrawals, no matter how small they might be. Withdrawing profits is a good way to incentivize your trading as it gives a sense of achievement. The goal should be to make sure to reward yourself after a week or a month so that you can stay motivated and positive about trading.

Now that we have talked about what to do, it's time we talk about what not to do. Once you start trading, you might realize that you are not headed down the path that you initially thought - being a successful trader. There are few dangerous emotions that every trader goes through at least once in their trading journey before they realize that something is wrong.


This is the first emotion that comes to a person when they start trading, something natural when you see your trades going in the opposite direction. But this is what sabotages a perfect trade and forces the person to exit at the wrong time. This must be avoided and one needs to learn to control their emotions as it always gets the better of us. One of the common reasons for panicking in trade is risking too much that you cannot afford to lose. This instills fear as even a little bit of drawdown can make a person anxious about the loss as he was not at all comfortable with opening a position with such high risk in the first place, leading to closing out of position at the wrong time. At this point, you didn't willingly get out of the trade but the market forced you out. Always remember, whenever you are trading, the market should not dictate when to trade and when to get out, this freedom should always be in the hand of the trader.

Revenge Trade

Revenge trading is one of the most common responses to a loss. This is what most of the traders do and end up losing even more. Revenge trading means opening a position to cover the previous losses. This particularly involves over-risking, poor analysis and impulsive entry as the trader has only one thought on his mind - cover previous losses, which in most cases leads to blowing up of the entire account. So, the best practice is to just shut down the trading terminal/ PC, go out and take a walk or do some things that you like but don’t sit in front of the trading terminal as this will bring nothing but more pain and yeah markets can be seductive. You can never make up for the previous losses in just one trade, always keep that in mind.

Similar is the case when you are on a losing spree, it means it is time to take some time off the charts.


Missing out on an opportunity is the worst feeling to have and seeing others benefiting from the same opportunity that you missed is even worse. This is how traders feel when they miss out on a trade or an entry point, resulting in impulsive entries which a professional trader would never take or even a normal trader would never take if he didn’t have FOMO. Such anxiety needs to be kept in check as the market always repeats itself and the same opportunity will arise again. Just be patient and wait for your time. The best part of the market is that even if you miss one or two opportunities, there will still be plenty of opportunity to grab onto. So, next time you miss out on a trade, sit back, trust your analysis, and be patient for the next opportunity.

In the end, a trader must grasp that formulating a good strategy is not enough, you need to have the emotional balance to deal with the situations that arise from time to time while trading. The market keeps on testing the limits of the trader and only those survive that adhere to discipline and keep their emotions aside when they sit in front of the trading terminal.

Author: Kartik Singh - Associate, General Management, Fxview

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Fxview is run by a team with backgrounds in Forex, Finance and Technology. We focus on delivering our customers transparent, low cost trading conditions, cutting edge technology, and great support.
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