my friend who does not work in finance asked me the other day what makes a good forex trader. Good question. Many will think its profit and loss, and many will be right I think. But what really makes a good trader though?
Many lucky month, year or even two in a row, to make large amounts of money and then lose it all. So, after a year will tell you to say that he is a good trader? Not sure. Lucky, for sure. So where do you draw the line between skill and luck?
This is open to debate, of course, I'll try to summarize three key points:
Trading style. Mentality, the approach to risk. Different traders can do exactly the same amount of money, but only one may have gotten a long position, to drive for awhile (willingly or out of laziness), and then cashed in. The other trader might be out of the market hundreds of times, each time with a clear stop loss and target profit. He could be following a clear set of trading rules with discipline and earned a small but constant gain every day.
market conditions. In the bull market the average dealer is a 50% chance of getting the right direction. If he gets it right just to run to when things will turn into a trend. So it is clear, straight bull / bear market oriented. On the other hand, can be very choppy, volatile market with big intraday swings and no clear direction. U.S. natural gas market is a clear example of this. Great volatility, high seasonality, and often without a clear trend. So, all else being equal, I would say that a trader in "choppy" market would have more skills. Why? It is obviously difficult trading in the market, but also because it is open and closed positions much of his statistical chances of "getting lucky"when it is greatly reduced.
Rationale for placing trades. And it's not something you can estimate by just looking at PNL scale, but it is something that you know, if you know the dealer personally. Upon asking him why he put in such and such a position will immediately get the felling that if he cleans the punter and thought it would go long (say), because "the market is going up, " or whether he fully understands the technical, as and the basics of the forex market.
All in all, according to a trader's profit or loss is only part of the complete image, but important. There are a number of other qualitative factors that will determine whether or not to trust your income (and life) to give forex trader or a Forex trading system.
There are no secrets in Forex trading. The key to making a profit is knowledge and this can only be gathered by reading the professional reviews of forex systems and signals.
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