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Five Things Successful Traders Do

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New York Stock Exchange

For years, I’ve heard that 90% of traders lose money trading, and they lose it to the 10% who are making money. More recently, it seems that the numbers I hear are 95-5, so even worse.

FXCM recently released a report showing, according to them, retail fx traders received better executions than institutional or exchange traders. In my experience working for two fx brokers, they are exactly right. Retail traders get ridiculously great pricing and fills.

How is it that retail traders are getting better pricing, but they still lose on a higher percentage of trades than institutional and professional traders? I think there are five reasons why retail traders aren’t as successful as professional traders.

1. Execution of Trading Strategy

Through many years of working on a trading desk and talking to customers and banks, I didn’t see much of a difference in the actual trading strategies between our trading desk, the trading desk at a bank, our institutional/professional traders, or our retail trader. Everyone has the same access to charting, technical analysis and pricing analysis.

Professional traders do not simply limit themselves to technical analysis. They know their own trading very well: their tendencies, how much they are comfortable risking, how to minimize their bad trades while maximizing their good trades. It’s more than even that. Good professional traders have scenario analysis that gives them further analysis on their own trading: expectancy, confidence, equity moving average, etc.

Professional traders also tend to look at a potential trade through the lens of many different trading strategies and many types technical analysis. They also have a pulse on the fundamentals behind the products they are trading. They eat, sleep and breathe the markets.

2. Big Picture Oriented

A professional trader and a retail trader might be trading the same strategy and looking at the same chart to make a trade, but the professional trader is looking at many other things to determine the viability of a trade before entering the trade. There is no fear of missing a trade. The professional trader lets the trade come to them…they are not chasing trades.

So what are professional traders looking at that retail traders often ignore? Professional traders are looking at long and short term charts and analysis…and they ask themselves what could happen…how could this trade go wrong…how much could I lose on this trade?

A professional trader looks beyond this trade and is more concerned with the overall market. What could hinder me from hitting my limit? What could cause the market to move against me? When might I need to cut my losses? They aren’t waiting until they are in position to think through these things…they are asking these questions before making the trade.

3. More Discipline

Enough cannot be said about discipline in trading (or any endeavor). The best traders, professional or retail, are all very disciplined. Looking at the last two things that make people better traders, the best traders do their research before entering the trade.

The best traders know why they are in a trade. They know when they are going to get out of a trade. They work orders. Why? Because they have seen what can happen when you don’t work orders. They work stops and let those stops fill if they are due to be filled.

A less disciplined trader will pull their stop because they just know that the currency, stock, commodity is going to go their direction. They just don’t want to miss out, or maybe, they just can’t stomach losing on another trade.

4. Oversight

Most professional traders answer to someone. There is a boss, an investor, another trader. There is almost always someone that a professional trader has to answer to and make a case for each and every trade. Sometimes, they don’t have to make a case of the trade beforehand, but they will need to answer questions if the trade goes bad.

Those questions are almost always around the other points of this article. “Didn’t you see that the daily chart was showing this and was clearly a strong trend in the opposite direction?” “Where was your stop order to protect from this happening?” “You risked 100 ticks to gain 10?” “Why did you take the trade?” “Why did you move your stop?”

Trust me. These are just a tip of the iceberg in terms of questions asked when a trade goes sour. It is a very uncomfortable time, and the trader needs answers to why they did everything.

My point is this: How many retail traders have to make a case to someone before making a trade? Sometimes, it is good to get someone else’s opinions on a product before trading it. After working on the desk for 9 years, I found that my fellow traders hardly ever agreed with my analysis. At the very least, they had very good insight that I was missing.

5. Patient and Calculated

Professional traders are very competitive and very confident. The best traders wait until the odds are stacked in their favor before trading. I love the Jim Rogers quote: “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”

Like I said earlier, the best traders let the trades come to them and don’t go chasing after trades. They are patient. They are calculating. They take risks and lose money, but the money they lose is calculated beforehand. The risk of them losing is small, as is the amount of money being risked.

The point of all of this is that you don’t need tighter spreads to be more profitable. You probably don’t even need better charts or a new trading strategy.

Most likely, all you might need is more insight and better discipline on applying that insight. Just like most things in life, more knowledge is a great thing, but discipline can really reap positive rewards.

Forexcrunch

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Pound

British Pound Extends Decline as 44 British Lawmakers Resigns

British Pound sustained its decline against the United States Dollar and other global counterparts on Wednesday after five additional British lawmakers resigned their positions in protest against a series of scandals rocking the House of Commons in recent weeks.

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British pound

British Pound sustained its decline against the United States Dollar and other global counterparts on Wednesday after five additional British lawmakers resigned their positions in protest against a series of scandals rocking the House of Commons in recent weeks.

A total of 44 British lawmakers have resigned under Prime Minister Boris Johnson’s leadership, accusing the Prime Minister of engaging in or condoning actions that put parliament moral in question.

Against the American Dollar, Great Britain Pounds (GBP) dropped from 1.2164 it peaked on Monday to 1.1934 in the early hours of Thursday.

While against the Japanese Yen, one of the world’s safe-haven currencies, GBP exchanged at 162.02, down from 165.26 it traded on Tuesday.

The decline was broad-based as the embattled GBP also lost some ground against the Swiss Franc to exchange at 1.1568, down from about 1.1687 on Tuesday.

On Wednesday,  five lawmakers signed in one go. In their letter, they said “It has become increasingly clear that the Government cannot function given the issues that have come to light and the way in which they have been handled,” they wrote.

Selaine Saxby, Claire Coutinho and David Johnston were the latest lawmakers to tender their resignation on Wednesday.

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Naira

Naira Plunges to N621 at Black Market

The Nigerian Naira remained under pressure at the unregulated parallel market popularly known as the black market on Tuesday.

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Naira - Investors King

The Nigerian Naira remained under pressure at the unregulated parallel market popularly known as the black market on Tuesday. The Naira exchanged at N621 to a United States Dollar amid persistent foreign exchange scarcity.

At the Investors and Exporters’ forex window, the local currency dropped to N425.75 against the United States Dollar after opening the day at N422.25/US$1 on Monday. Forex traders in that segment of the forex market transacted $47.56 million in value and volume, Investors King reports.

However, Naira improved slightly against the U.S Dollar at the Central Bank of Nigeria (CBN) forex section. Naira exchange rate to dollar improved marginally from N415.86/US$ to N415.8.

Against the Pounds Sterling, the Nigerian Naira declined in value to N505.6544 from N500.6539. Similarly, against the European common currency, the local currency dipped slightly in value from N434.0331 to N434.7605.

Crude Oil

Oil prices dropped by $6 on Tuesday as concerns over the global recession containing demand outweighed supply concerns.

Brent crude oil, the international benchmark for Nigerian oil, declined by $6.65 to $106.85 a barrel while the U.S. West Texas Crude Oil lost $5.65 to $102.78 a barrel.

“Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair,” Stephen Innes of SPI Asset Management wrote.

Crude oil remains an important commodity for the Nigerian economy given its nature as a mono-product economy. Africa’s largest economy relies on crude oil revenue to service its economy and sustain its currency value against its global counterparts.

However, the inability to prop up crude oil production despite the increase in oil prices continued to hurt Nigeria’s foreign reserves and the availability of dollars in the economy. Hence, the Nigerian Naira is presently trading at a record low of N621 to a United States Dollar.

Cryptocurrency Exchange Rates

Global economic uncertainty ahead of the projected recession continues to dictate the performance of the cryptocurrency space in recent weeks.

Bitcoin extended its decline by 2.37% in the last 24 hours to $19,387.33 per coin. ETH, a token of the Ethereum protocol, lost 3.09% of its value to $1,079 a coin.

Meanwhile, Meta, formerly known as Facebook, has suspended its cryptocurrency project called Libra.  Celsius, a cryptocurrency lender, has paused withdrawals and announced plans to cut 150 jobs.

Cryptocurrency space market value dropped from over $2.5 trillion at its peak to about $900 million presently. The huge decline forced several players to cut losses and halt capital inflow into the cryptocurrency space.

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Naira

Dollar to Naira Today Wednesday, 29 June 2022

The dollar to naira exchange opened the day at N420.70 to a U.S. Dollar on Tuesday and closed at N421, representing a decline in value of N0.30.

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Naira Exchange Rates - Investors King

The dollar to naira exchange rate today Wednesday, 29 June 2022 remained largely unchanged at the Investors and Exporters forex window and the Central Bank of Nigeria (CBN)’s section of foreign exchange.

The dollar to naira exchange opened the day at N420.70 to a U.S. Dollar on Tuesday and closed at N421, representing a decline in value of N0.30. Forex traders transacted 206.65 million dollars at the official Investors and Exporters window on Tuesday.

In the CBN forex section, U.S. Dollar was sold at N415.6 by the apex bank to authorised dealers, slightly better than N415.64 it exchanged on Monday.

Against the Pounds Sterling, the Naira appreciated from N509.824 to N508.53. However, against the Euro common currency, the value of the Naira dropped from N433.05 on Monday to N439.5 on Tuesday.

Dollar to Naira Black Market Exchange Rate

Forex scarcity continued to drag on the Naira value in the unregulated foreign exchange market popularly known as the black market.

On Wednesday, the Naira was exchanged at N614 for a United States Dollar on the black market. Representing another decline of N7 from N607 it was sold two weeks ago.

According to traders in that section of forex, rising demand amid a chronic scarcity is responsible for the wide foreign exchange rate of the local currency and could worsen if developed economies plunge into recession as widely projected.

Inflow into emerging economies like Nigeria will drop, hence impeding the apex bank’s ability to service the economy.

Crude Oil

Crude oil extended its gains for four consecutive days on Wednesday after it became obvious that OPEC and its allies will not be able to meet their targets as projected.

Brent crude oil, the international benchmark for Nigerian oil, appreciated to $120 a barrel on Wednesday while the U.S West Texas Intermediate (WTI) rose from $99.33 per barrel a week ago to $112.37 per barrel.

According to Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA, said “A surprise drop by US API Crude Inventories by 3.8 million barrels helped the bullish momentum, with markets ignoring the rise in refined product stocks. Disruptions to Libyan and Ecuadorian production were supportive, but the Macron’s remarks yesterday around Saudi Arabia and the UAE’s limited production capacity seems to have been the main driver.”

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