How To Be A Successful Forex Trader (the secret is in this one article)

You may remember from last weeks post on small time frames that I recently surveyed hundreds of Forex traders. It has taken me months to collect and analyse all the data but it was worth it.

With the data I was able to identify many of the things that profitable traders share; from time frames to the amount of time spent trading each day. The infographic below reveals how to be a profitable Forex trader.

While you do not need to follow all the guidelines below each one could statistically improve your chances of success in Forex.

It took me near one hundred cups of coffee, countless sleepless nights and a large piece of my sanity to collect, analyse and display all this data. If you find this useful in any way please Like, Tweet or +1 using the buttons below.

283 comments

Julie

June 1, 2012

Great article Nick – everything you write rings true in my experience of forex over 5 years. A trading plan is a must – after all, this is a business that I’m running and I wouldn’t start a business without a business plan. I never trade more than 2% of my capital – this may slowly rise to 5% on certain trades, but it will never go above that. Once I started my trading journal my negative trades decreased. I trade exclusively in the higher time frames and for about 2 hours a day and on only 3 days a week (Tues, Weds, Thurs)

However, I don’t know why you say that the fact that women are better traders than men might be perceived as controversial … would you have made the same comment if the facts were the other way round and men came out as better traders than women?

I’m quite disappointed in your “quite controversial” comment – really no such comment was needed at all. Why not just present the facts?

Now, I’m not some raving feminist trying to make a point here – but we are in the 21st century and stereotypes should be (but apparently are not) so last century.

A positive spin would to be to find out why one group is more successful than another. Maybe the more successful group are better at keeping trading journals, or are more/less aggressive or competitive, or trade at different times of the day due to a different range of committments, or trade more cautiously, or are better at analysing what the charts are telling us … I would have been equally interested in such facts had men come out as being better traders.

Nick

June 1, 2012

Hi Julie, I would definitely have made the same comment if it were men. What I mean’t by controversial is that men might complain. If the stats were reversed I would have made the same comment as women might have complained.

I mean’t controversial in the sense that one sex is shown to be better than the other. It does not matter which sex produces better traders it is controversial either way.

Anyway, to prevent any other misunderstanding I removed the comment.

I will explore the stats further to try and find a link between trading proficiency and women.

Julie

June 1, 2012

Hi Nick – fair enough, I was surprised that you might have been biased.

Even so, I think the article would be stronger without that comment, which can be read as a value judgement even if you don’t mean it to be.

Also, it would be interesting to see if men do complain or contend the facts, which they may be less inclined to do if they read that comment as a judgement value and agree with it …..

I also meant to say that your infographics are super !

Bill Lanphar

June 1, 2012

Actually I feel the info on women being better traders is very helpful The temperment of most women is much different than men. So I’m sorry the brain Police have cencored free speach once again.

Scott_frank

June 1, 2012

Nick, Well done, though nothing you found surprised me…it rang more profound and logical to me. I appreciate you more than you know, to take the time and effort to put this together for newbies…thank you for all you do!! I just recently came across your site and have been going through your videos slowly. I’ve had major blow outs over the years and now I can’t afford to repeat that process. So here’s to future success and more education to get things right.
Keep up the great work you do, thank you for caring and may life smile on you :-)
Scott

hickh

June 1, 2012

WOW Julie!!! Enough said there. I would like to first say ‘keep up the great work Nick’. Second; I work in a laboratory and have read quite a few books directed toward analysis, statistics, probability, and so on… We ””all”” tend to miss the head of the nail when it comes to figuring odds and so on (human nature). There are a lot of doctors who actually misrepresent ‘odds’ and ‘chances’ to their patients and don’t even realize it. Anyways; I wanted to comment on the female vs. male thing by saying it could be very true with a ‘however’… Since when looking at stats such as this, you obviously have to look at all of the facts.

Example: Let’s say that men ‘in general’, no matter what their intelligence level is, are more likely to jump in and try something like trading than women are. Now let’s say that for women, only the ‘more intellegent’ are the ones who try trading. That right there would scew the results of who the better traders are. (o:

I must admit that I must be one of the average, or less intelligent men traders because I still haven’t found the data that goes with this post. I’ll find it eventually.

Julie

June 1, 2012

Thanks Nick for your positive response – I do think that the article is much more open without the comment – let people make of it what they will without any hint (albeit unintentional) of bias.

I know that you don’t see me as censoring your free speech like the thought (brain???) police !

The statistics you published are interesting – but an analysis of what makes that statistic would be very useful. I have a number of trading buddies and we have noticed this difference – although we’ve never quantified it as you have.

What we have noticed is that more women can walk away from a potentially “dodgy” trade where male traders would (and have on more than one occasion) taken that trade. We analyse our trading journals together periodically and those “dodgy” trades pay off for them less than 50% of the time – whilst they are also more stressful trades.

Another thing we noticed (and this is a generalisation based on small, mixed group of traders and our journals) is that men are more likely than women to (a) “revenge” trade, (b) over-trade and (c) stay in a bad trade for too long in the hope that it might turn around. But, roughly, the % difference between men and women and these trading traits are as close as your infographic suggests.

So, the question is whether or not these are gender-related trading behaviours or personality-related behaviours where there is a bias for certain behaviours to be gender-biased.

I think that you’ve started what could prove to be a very interesting study. The results would be helpful to new traders and you could eventually add a whole new module to your already excellent Advanced Course which would help new traders assess their own personality type when it comes to trading.

Jasmine

June 1, 2012

This is awesome, helpful, and practical!! Thank you very much Nick. Appreciate the work you put into it.

Eric Chun81

June 1, 2012

Mate this is awesome Nick you are the man for sure! Thanks a bunch!

Jennifer Kok

June 1, 2012

Awesome!!! Thanks Nick!!

Stephen Lee (NZ)

June 1, 2012

Hi Nick – Thanks for putting all of this together and presenting in such an easy to digest format. Info which would be very difficult to obtain working on our own as many of us do…

Muskrat

June 2, 2012

Great stuff Nick most interesting.
Chic

Mike

June 2, 2012

Nick, great stuff. I really appreciate the time you put into this.

Chickoman53

June 2, 2012

Nick, information like this shows that you really care about the success of your members in forex.

Topgun

June 2, 2012

Nick, these are interesting stats. However, I think the problem with some of the stats is that the traders that responded to your survey have obviously been exposed to your website and your methods and your trading course. This fact alone can cause a bias towards the survey results. For example, you say that the survey showed that the higher timeframes generally produce more profitable traders. The problem here is that you generally teach to trade the higher timefames. Thus, odds are that most of the survey respondents are most likely to only trade the higher TF’s. This is why I say it is hard to get a totally accurate and unbiased response to some of your survey questions.

Having said all that, I still think the info you gave is interesting.

Nick

June 2, 2012

I could see why you would think that as I did not put all the details into this post. However, 75% of survey results come from other websites. All websites vary in their approach to trading. There was even an automated trading website involved. In total four websites participated including forex4noobs.

The other three websites were paid by me to participate. I bought advertising space in the form of a pop-up survey.

Nick

June 2, 2012

Thanks Chickoman.

Nick

June 2, 2012

Thanks for the comment Mike.

Nick

June 2, 2012

Thanks for reading and commenting Muskrat

Nick

June 2, 2012

Thanks Stephen. I saw a few infographics last year being used in other industries. It implanted the idea to use them for Forex. I love infographics, like you said they are easy to digest.

Nick

June 2, 2012

Hello again Jennifer, thanks for reading and commenting!!

Nick

June 2, 2012

No problem Eric, thanks for leaving a comment, it is much appreciated.

Nick

June 2, 2012

No problem Jasmine, thanks for reading.

Nick

June 2, 2012

Julie, in response to both your comments below, upon further investigation it seems women are more likely to keep a plan and a trading journal. This does not surprise me as it was not until I met my girlfriend that I really started to plan my trading. I raised my win rate from 70% to 90%.

Unfortunately the data does not show me much of the behavioral side of men vs. women.
It make sense than men are more aggressive and are more likely to take revenge trades ect. However, I cannot see this from the data.

Nick

June 2, 2012

Honestly, it is not about the brain police. I could see how the comment could be taken the wrong way. I don’t want to become know as a sexist to the large female reader base. I left the chart of men vs. women in but I removed a sentence and replace it with another.

Nick

June 2, 2012

Thanks for the comment Scott. Hope your trading improves man.

Nick

June 2, 2012

Good point HickH. Men tend to be more willing to take risks. After looking at the stats again I found that women are more likely to have a trading and money management plan.

I think women take less risk and take a more structured approach towards trading.

Bobbhim

June 2, 2012

This is a good analysis. There is a lot of good info for me which I will take note of in my trading. Thank you for providing this data. To add to the sex comment my buddy and his wife are traders and she is better hands down and he admits this ruefully of course.
Thanks Nick.

Topgun

June 3, 2012

Nick, thanks for explaining. I did not know of the details of how you did your survey. Knowing that various websites participated in the survey (instead of only your website) makes me more confident in the results. Good job!

Stéphane

June 3, 2012

Tremendous job. Thanks a lot for that one, Nick

hickh

June 3, 2012

Duh, found the data once I got off the computer that wouldn’t allow it to show.

Ben

June 4, 2012

Trading the higher time frames is a very good cue for wannabe traders and trading the 4hour time frame is a good middle ground from looking at your data Nick. It makes one wonder how many traders using the intraday timeframes form 30 minutes and below find it too difficult trading the highly frequent volatilities that exist in this arena and how many also trade at the wrong time of the day for a particular currency pair. The higher time frames experience a much less frequent amount of volatility in the same space of time as the lower time frames mentioned. Have found this survey very informative and give it 9 out of 10.

Bomi_t

June 4, 2012

Hi Nick,

I just started forex one month back. I am still learning from your site and your email every week. One thing I must tell you that the information and the education which you are giving us is clyster clear. Person like me can easily understand. I am keeping all your educational notes. I hope you will continue provide informations to newbies like me. I sincerely appriciate your help.

Bomi