Developing the Killer Instinct of Top FX and CFD Traders

The idea that trading on the foreign exchange markets – whether buying and selling the currencies themselves or engaging in CFD (contract for difference) trading – is a way of getting rich quickly has been comprehensively debunked many times over, but it’s still probably worth stating again. If you’re looking for easy money and guaranteed quick returns, then the FX markets are not the place for you. In some cases, getting lucky with the first trades you make and coming away with a reasonable profit can actually be the worst thing that can happen. It can convince you that you’ve got ‘the touch’ when it comes to forex trading and this kind of over-confidence, especially when it’s coupled with the leverage opportunities offered by forex brokers, can lead to big losses.

That’s not to say that it’s not possible to make money trading forex since the world is packed with tens of thousands of people who do exactly that every day of the week. It’s just that, like most things, forex and CFD trading is a skill that you can only master with a combination of practice, study, and developing the right mindset. It’s possible to nurture the kind of killer instinct exhibited by the very best FX and CFD traders, but it requires commitment and hard work, and the following advice will put you on the right track. By analyzing the behavior, tactics, and mental approach of the top 5% of traders it’s possible to build up a portrait of what drives their success. Noting these particular attributes and applying them to your own trading activities will be the first step toward becoming a highly successful trader in your own right.


Emotional Control

It’s easy to get carried away with the emotional reaction to forex and CFD trading. The adrenaline rush of a successful trade or the disappointment of a losing position can lead to you chasing your losses or becoming over-confident and taking up reckless positions. In either case, the strategy which you set out to pursue when you started trading will quickly become forgotten and, if this strategy was based on careful consideration of all the relevant metrics, then you’ll be moving into uncharted waters. Developing the instincts of a top trader doesn’t mean relying on just your instincts. After many hours of trading, you may begin to develop a ‘sense’ for how the market is moving but, even then, top traders will never trade entirely on the basis of an emotional response.

Successful trading requires the ability to detach your decision-making from your emotional reactions, something which doesn’t come naturally to the vast majority of people. As each trade plays out, you need to be able to forget about the trade before, whether it was a good or bad trade, and simply concentrate on the matters at hand and the strategy you’re pursuing.


Control Spending

A simple piece of advice, but one which traders often forget in either the excitement of successful trades or the pain of losing positions, is to keep a very careful watch on the overall amount of capital you’ve invested. Don’t pursue losses in the hope that the situation will shift, and don’t go bigger on winning positions in pursuit of bigger profits. Set the amount of capital you can afford to lose and don’t go beyond that limit, whether you’re having a good or a bad day trading.


Do Your Homework

Successful trading is about hard work as much as it’s about anything else. Some novice traders don’t really want to hear this, as they’ve got an idea in their heads that FX trading is an easy way of making money. It isn’t, because successful trading of any kind relies on in-depth knowledge of how the markets are currently behaving and therefore how you think they’re going to behave in the future. The FX market is global and 24 hours in nature, so the amount of information you need to absorb can seem overwhelming at first. Start by concentrating on just a few currency pairs. Study how the pound, dollar, and euro have shifted in relation to each other in recent months, and make it your business to look ahead and see what geopolitical or societal events might cause shifts in the future. At the same time, read the guides that are easily available online, or the books which have been published, outlining both the basics of trading and various established strategies. You don’t have to slavishly follow an existing strategy, but the more information you have to hand, the better placed you’ll be to respond to events without having to fall back on your emotional reaction.


Play the Long Game

Don’t expect – this is being repeated but it can’t be stressed enough – to get rich quickly. The way that the FX markets work and the impact of compound interest on any profits you make means that it takes time to build up your income stream. Another way in which being patient can pay dividends is by monitoring the markets for many hours before choosing the perfect moment to make a trade. To some new traders this may sound boring but using the knowledge and data you’ve gathered to time your trades perfectly is actually far more ‘exciting’ than making lots of trades and hoping the law of averages will deliver sufficient success.



Use a combination of all of the advice detailed above to put together a detailed trading plan before risking any of your capital.  It may sound incredibly old-fashioned in this digital age, but an extremely useful tip can be to actually keep a trading journal. The simple act of sitting down and physically writing a ‘diary entry’ of all the trades you do can be immensely useful when it comes to spotting previously hidden underlying patterns of behavior and trading. Note down what you traded, the times you entered and exited the trade, and why you made the decision you did. Did you follow the trading plan you set for yourself and was the trade successful? An element of the right instinct involves being able to assess any mistakes you might have made, learn the lessons, and move on without being hard on yourself. A trading journal will make this easier to do by setting everything down in black and white, rather than leaving you wondering exactly where you went wrong and why.

The phrase ‘killer instinct’ is probably a bit misleading in its own right. It implies that some people are born to be successful traders with a natural flair for working the FX markets. While a certain kind of temperament is always going to come in handy, the truth of the matter is that trading well is less of an art and more of a science that can be studied and learned. Take the time, do the homework and put in the effort and you’ll develop the kind of habits that have helped turn the top 5% of traders into the very best.

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