Why You Don’t Need To Be Smart To Be a Trader
Many people think that you need to have a Master’s degree in Finance or be some Albert Einstein math-wiz to be a successful Forex trader. Well, I am living proof that you don’t need some fancy college degree or a doctorate in mathematics to be a skilled trader in the Forex markets. I started trading when I was in high school and shortly after getting out I started to become successful as a trader. I never finished college, and I don’t claim to be the “sharpest tool in the shed”. However, what I understand, and what other consistently successful Forex traders understand, is that trading success is not only about knowing you need to control yourself and your actions in the market, but actually doing it.
I know that sounds simple, but being a successful Forex trader really does boil down to these two main points:
1) Understanding that you must consciously control your interactions with the market so that you always do what is logically and objectively the best thing for your trading account at any given time.
2) Actually doing number one; it’s not enough to just understand….you have to actually DO. Remember, as Yoda said in Star Wars, “No! Try not. Do, or do not. There is no try.”
A good analogy for this concept is the fact that some doctors smoke cigarettes, I personally had a a doctor who I knew was a smoker when I was kid. Now, it’s pretty safe to say that all doctors UNDERSTAND they should not smoke or do anything to damage their body. So…it isn’t that they aren’t smart enough…it’s that they just don’t have the proper habits and (or) they aren’t disciplined enough to carry them out.
The same thing can be said for many Forex traders; it isn’t that they aren’t smart enough to understand how to trade properly….it’s that they just don’t DO WHAT THEY KNOW NEEDS TO BE DONE.
Long-term success vs. short-term satisfaction
Successful Forex traders understand that their trading success is measured over a large series of trades, not just a few. This is not a difficult concept to understand; you don’t need a genius IQ or a degree in finance to understand this. So, once again, we are seeing exactly why you don’t need to be super smart to be a successful Forex trader. What you DO need is some common sense and the ability to act on what you know is true.
So, a key element to becoming a consistently profitable Forex trader is aiming for long-term success, rather than short-term satisfaction. Giving into short-term satisfaction is the main reason why most Forex traders lose money. It isn’t enough to just know that you shouldn’t give into short-term satisfaction in regards to your trading; you have to actually not do it. Amateur traders end up over-trading and risking too much because they cannot overcome the temporary satisfaction that these actions bring to them. You have to be able to ignore these temptations with the knowledge that exercising patience and discipline is the only way to become successful over a longer period of time. What good is winning a few trades really quickly if you give all your winnings back the next week or the next day? Traders who give in to short-term satisfaction are constantly experiencing very volatile changes in the equity curve of their trading accounts, this usually ultimately ends in disaster with a blown out account.
So, while it is important to understand the importance of patience in Forex trading, you ALSO need to execute this understanding by ignoring all the short-term temptations that will come at you every time you open your trading platform. In fact, you could say that the way you manage your interactions with the Forex market is far more important than your intelligence or your ability to understand complicated mathematical trading algorithms or any other similar unnecessary trading “tool”.
What types of people typically make good traders?
While there is no concrete rule as to who can be a successful Forex trader and who can’t, certainly people who are naturally more disciplined and realistic have an easier time achieving success in the markets than people who lack discipline in most areas of their lives and (or) who tend to ignore reality.
Discipline and overall fortitude are indeed FAR more important than intelligence when it comes to successful Forex trading. Many highly successful people in other fields fail miserably when it comes to trading the markets. Doctors, lawyers, college professors, you name it, there is no shortage of people from these highly-skilled fields and others that have lost thousands of dollars in the markets. It’s not because they weren’t smart enough to understand the concepts…this clearly is not the case; the reason highly intelligent and highly skilled people have no real advantage over anyone else is because becoming a professional Forex trader depends mostly on your ability to execute…not to comprehend.
It is execution of discipline that makes a successful trader, this means reinforcing positive trading habits instead of negative ones and making a conscious effort to make sure all your actions in the market are logical and not-emotion based. For these reasons we often see ex-military personal succeeding in the markets; because they know what it’s like to make discipline a part of their everyday lives. This is not to say that successful and intelligent people in other fields cannot be successful traders, in fact this is obviously not the case it all, I am just trying to emphasize the fact that intelligence and previous accomplishments do not really matter at all when it comes to trading. What matters the most is your ability to stay dedicated to and master your Forex trading strategy, your ability to stay disciplined in the face of constant temptation, and your ability to stay realistic.
Keep It Simple Stupid
Yet another result of amateur traders erroneously believing that trading needs to be complicated or that they need to be super smart to succeed at it, is the fact that so many of them employ Forex indicators and (or) Forex trading robots to try and analyze and trade the market.
I won’t lie to you guys, early on in my trading career I tried all the typical indicators, I was stuck in the analysis-paralysis rut and I thought there was some “magic” combination of indicators that if I could just figure out, would give me a virtual key to riches. After enough trial and error I realized that was just not true. I began to notice the beauty in the simplicity of the price action occurring underneath all the messy indicators I had on my charts back in those early days. Once I peeled off all these indicators and swore them off forever, I began trading on simple price action strategies, these are the same ones I use today and that I teach to aspiring traders, granted I have definitely tweaked and refined them, but the simplicity remains, because it works.
You see, there is no “magic” indicator and there is no knowledge that I have that you guys cannot or do not already have. The difference between traders who are successful like me, and traders who are not, can only be explained through the difference in our behavior in the market. I trade a lot less than you might think, and so do the other successful traders who I know. It’s all about trading Forex like a sniper instead of a machine gunner. If you’d like to learn more about this “stupidly” simple style of Forex trading check out my price action trading course.
49 Comments Leave a Comment
Great insights Nial.Glad to read your articles,i started to change myself as a trader.I trade mostly demo ,because of learning,but simply done any of the mistakes you mentioned as a novice trader.I got enormous returns,just to cripple back returns to simple digit positive returns(i got two digit returns in the lower tenth),just two days after starting,and today is my day of revelation,after getting a huge setback and just one digit positive return,reading your articles was a miracle.You really englightened me with your knowledge.
Brilliant! Comprehend is important but execution is what separates successful trader than a total loser. Be strong & stay disciplined no matter what. Thanks Nial!
Great article Nial, I’m really enjoying being part of this trading site. With each of your article, I am a successful professional trader.
Thank you very much.
Your messages are powerful! Also your suggestion to re-read these at least 3 times works to help make this info not only understood but remembered so that these “meaty goodies” can be implemented.
Thanks again – Larry
Very true. When I removed indicators and focused on price actions, trading became much easier and simpler, Thanks Nial for teaching us your price action strategy.
thanks nial for your lessons..
Until I began to read your postings,I never knew that I was one of those people who was over trading.
It has taken me three years to work it out.
Now I’m sometimes successful with my discipline,but I am a very inpatient person.
This has taken a long time to control,at times,with hope.
Nial,once again very sound advice.I have wasted a lot of time & money attempting to succeed with “robotic”strategies overloaded with indicators that I have proven not to work.
AWESOME lesson once again. Just a short note to say thank you for all the lessons and the excellent course. My trading has improved greatly.. I am finally starting to be more of a sniper than a machine gunner.
Great article. Thanks so much.
I like all the articles u have written and this one is yet another good one. Thank you.
it feels like this is personally directed to me.with all your articles I have created my own forex learning manual.once again thank you Nial for letting me see myself in black and white.
I agree every inch of the article you wrote…yes it is down to person hinself..
All too true. I used to look to have at least one trade per day. Went back to demo trading and now am happy if I get one or 2 trades per week and my success rate is increased. This is definitely helping my confidence which has to help improve my discipline as well. Thanks again, Nial
Patience is the key,I agree. trade set-ups based on long/medium term charts almost always provide better results.
Nice article !
Good article, Nial, learning lots of new thngs!
I found this simply poetic. “… becoming a professional Forex trader depends mostly on your ability to execute…not to comprehend.”
You have spoken the appropiate words. In life, indeed, achievement is not a function of intelligence but a function of character.
And character is not a function of intelligence but a function of discipline.
And discipline is not a function of character, but the by product of a strong will, a humble desire, a daily commitment with yourself of being completely honest that you will tell yourself no lies, no excuses, no blames, no explanations but an honest heart and mind to do what has to be done daily, with the strength, energy, faith that you bring to your life.
And indeed, life is a constant endeavor of self mastering, not avoiding emotions, but guiding your emotions, not becoming a robot, but becoming a sort of flow, where mental habits, daily habits take the place of your insecurities and desires of success through your commitment to your self development and the mastery of your self.
Thank you again for such basic and deep insights about what is needed to become a real trader…..it’s indeed like becoming a Jedi, it’s not your strength but is your soul, character, emotion taken together into one single moment: the decisions you made and the reactions you choose to let flow.
May the Force be with us all who seek to become what we aim for.
Great lesson…you inspire me everday..
You have to be intelligent to write this simply, but clear and (for me) powerfull article.
Just a simple question. How many trades you do per week (avarage). Dont need to be precise.
Thank you for all the hard work and insight you ut in these aticlies .They mean alot .
thanks Nial great lesson
once again a strikingly simple but important aspect thoughtfully explained!
Great article Nial. And great comment Frank. It took me a really long time to recognize my demons and then learn to master my self. In fact I’m still mastering myself. I have a feeling it’s a lifelong process. But it needn’t be a difficult one. Just recognize what I’m doing wrong and rectify it. This step is very difficult in the early process. But the rewards are there as one gets better.
Happy and prosperous trading all.
Hope you are well. Thank you for another magnificent lesson.
Thank you for all your help
Thanks and Regards
Thanks again Nial for another great article. It is great to have a coach to remind us of the basics and the things we need to focus on for successful trading.
I read it over and over to feel it…yes it is true that patience and discipline to encounter the market will make trader successful as a forex trader.
I have the same routine everyday. Rain Hail or shine. I trade a lot less than a few months ago. Still in learning phase but Im much more content waiting for the right PA setup then jumping in. Win or lose is not the issue Its my structure and daily routine that sets me up to be successful.
Great little Nugget of gold there Nial
The force is with you.
Agreed .The true color of trader in trading.
have a nice weekend. Enjoy.
What a fantastic article!Since I came across your site and your forex trading strategies my forex fortunes have changed. I was a machine-gunner but now I am a desdly sniper and for the first time in my trading career I am faced with the prospect of doubling my account within one week. Not by using high leveraging but by increasing my winning percentage.
Thanks Nial, you are fantastic.
Sincerely believe that if you charged only a reasonable amount for your generous yet free advice and suggestions that you would be a very weathy coach. Please don’t change a thing you are and have been doing. Thanks…Larry
Powerful insights in this article,thanks Nial.Its so true,the best place to hide a secret is right out in the open!
Great article as always. The key here is disipline and sticking to your trading plan which is easy said then done.
Thanks Nial this is good,nice writeup
Once again Nial, you have hit the nail on the head!
Another fantastic article regarding trading.
You Da Man Bro! Keep em coming.
We don’t get paid to trade… we get paid to wait! It’s all about the discipline.
Good Article. This is nothing really new. It is well known that a large number of our millionaires and even billionaires today did not do well at school. Been “street wise and sharp” can go a long way to becoming successful! Everyone needs to check themselves to see if they have any personal bad habits like smoking, over eating, drinking in excess – (guilty) etc. If you have any of these then you lack self discipline. This lack of self discipline is a strong indication you are unlikely to make a good trader. The solution is to take control of yourself and resolve any of your personal flaws. End of Sermon!
“…becoming a professional Forex trader depends mostly on your ability to execute…not to comprehend.” Nial is absolutely right on this. He is talking about emotional i.q., not intellectual i.q. Recent research has shown that successful traders have a high emotional i.q., the ability to control their emotions. The American civil war general U.S. Grant was successful because of his ability to assess the current battle situation and then “act” and “execute” his plan at the right time. Much of successful trading depends on a disciplined military general’s approach. Thanks, Nial for these insights.
lol, I wish I read this earlier.. just finished my degree!
What an amazing insight!
Thanks a lot.
Well done Niall.
Funny thing -the more I trade the more your training tips become obvious.Thanks again for your direction.
You said it Nial! Keeping is simple with price action is THE ONLY WAY TO TRADE PERIOD!
Thanks Nial, Great lesson bro!
Hi Nial, in my simple English I would like to tell you that I really liked this article. Thanks for sharing your wisdom.
Very well done. Very, very true – it is hard to peal those
indicators off the charts, but believe me,everyone, this man
is right – Nial that is.
Very nice article, Nial.