As the 24/5 trading platform for foreign currency exchange, the forex market is becoming an increasingly popular global trading market. That’s why today, the foreign exchange educational experts at Learn To Trade are taking a closer look at the lessons the business world can learn from the success and failings of traders, demonstrating how there are valuable strategies, approaches and personality traits businesses can, and indeed should, look to emulate.
Pave your own path
It’s common for novice traders first trying their hand at the forex market to copy the strategy of a more experienced trader under the impression that if it works for one person, it will work for another. Likewise, new business startups may be tempted to mirror the business model of a bigger and more established brand within their industry or sector.
On the highly volatile and liquid forex market however, this is a risky approach. The successful trader spends years refining their own bespoke strategy based on personal successes and failings. In essence, an established strategy reflects the trader themselves. A trading novice would therefore benefit from establishing their own unique trading strategy, taking each profit and every loss as a new lesson to better refine their technique.
In much the same way, a business that looks to directly mirror the model and strategy of a more successful brand is setting itself up to fail from the get-go. Instead, new startups should look to pave their own path, enabling a steady and consistent business growth that ensures the business owner is never in over their head.
Risk awareness is vital
Whether it’s making logical calculations in high-pressure situations or remaining emotively neutral at all times, possessing a controlled and logistical mindset at all times is imperative to forex success as it ensures risk-awareness remains at the forefront of the mind. This is an important transferable skill applicable to just about any professional environment.
To the knowledgeable trader, risk is understood in two concepts – internal and external risk. The former entails a consciousness surrounding a person’s strengths and weaknesses, identifying the areas in which they hold particular expertise. The latter concerns risk in its more familiar form, where the trader evaluates the risk of a decision based on its context.
Businesses should look to implement a similar mentality to develop an innate risk awareness. For example, internal risk should be at the forefront of consideration if a business is contemplating branching out into an unfamiliar industry, acting under advised caution as a result. Similarly, external risk should be a prominent factor in any business decision, ensuring the choice is logical and considered at all times.
There are good days and bad days
In life, there are good days and there are bad days – arguably nowhere is this more apparent than on the forex market. The highly volatile and liquid characteristics of the trading platform means market movement can oscillate significantly at any given time, meaning potential big wins can just as easily become losses.
The lesson that can be learned here is patience and reason. Whether you’re trading currency or embarking on a new business venture, it can be far too tempting to throw in the towel following a particularly bad day. In instances such as these, traders are taught to take a step back from the market, ensuring they don’t place reactionary trades based on emotion rather than logic. Look to practice this in the business world too, understanding that knock-backs are an essential part of business growth. Rather than acting reactively, remove yourself from the situation and take time for contemplation.
There are plenty of lessons to be learned from the crazy world of forex. From psychology to action, look to implement the lessons learned today into your daily business practice – you may be surprised at the difference it makes to your profitability and subsequent success.
John James is a content writer for Learn To Trade, the foreign exchange education and learning specialists – offering a range of training courses to help people understand the currency trading market, as well as its opportunities and risks.