Successful forex trading requires passion, patience, planning, risk management, and strategy — things you also need to succeed as a startup founder
Trading on the foreign exchange, or forex, market is a pursuit (nay, a passion) that can be picked up at any point in your life. Some people manage to make a full time job out of it, while others trade to generate part-time or retirement income.
Forex trading is even one way you could conceivably get money to fund your startup, but today let’s talk about another benefit forex trading has to offer entrepreneurs: six skills that lay the foundation for successful trades and successful startup businesses alike.
Forex trading is not a get rich quick scheme. Once you make your plan, you have to have the patience to stick with it, even when things don’t go your way. The market will change and there will be good time to make a move, but most of the time all you can do is hurry up and wait. Running a startup is no different, because you won’t be an overnight sensation. As much as we all hope our businesses will “go viral,” the truth is that it takes months of preparation and effort to gain even a modest following. How fast will you give up?
2. Seeing the bigger picture
So your trades turned against you this week. Is this bad run the be-all and end-all of your stint as a forex trader? No. Likewise, trading on the forex market teaches you to take a wide view of the global market rather than obsessing over microeconomics. What might happen in the next year? How will it affect your trading plan? Good entrepreneurs ask themselves the same broad-minded questions: where is the market headed? What services or products will sell well in such a market?
3. Risk management
Opening a new trade is always risky because you never know if the trade will end in your favour or against it. Smart forex traders will put small amounts of money toward a trade, something that they can afford to lose. Entrepreneurs also need to have a strong handle on this “not all eggs in one basket” mentality. Whether you’re looking for funding or you’re developing a new product, it’s always wise to have a back-up plan.
4. Trading versus gambling mentality
Likewise, good traders know to end a trade once it is against them. It’s unwise to let a trade run, losing you more money the longer it goes, in hopes that the tide will turn and it will be in your favor again. Sometimes it does, sometimes it doesn’t, but gambling on the outcome isn’t wise. Successful traders move on. As an entrepreneur, if all of your market research, advertising efforts and product tests come back as dismal failures, you can either choose to push ahead toward a launch, which would be quite a gamble given what you know, or you can make some significant changes and scrap your original plan to try again.
5. Staying emotionally detached
According to Greg Secker from Learn to Trade, emotions are the bane of many forex traders, holding them back from the transition from good to great. Traders can’t get too worried about trades that fail, or too anxious about potential outcomes, too angry when something goes wrong or even too fat-headed when a trade goes deliriously well. Poor trading decisions are usually made spur of the moment and fuelled by emotions.
With your startup business, you can’t let emotions get the best of you either. There will be highs, and there will be lows. But if you get lethargic and depressed every time something goes wrong, you will never maintain the steady momentum needed to push your business plans through to fruition. By the same token, if you get too nervous about the market and push a product to launch before it has been thoroughly tested, you’re setting yourself up for failure.
6. Creating and following a plan
This skill is at the core of all successful forex trading and entrepreneurship. Can you create and follow a plan without getting sidetracked? Can you push steadily ahead toward your goals? Can you reevaluate your plan as needed, but nonetheless make progress?
Successful forex traders make calculated plans and stick to them even when their emotions get in the way or when the market behaves strangely. And successful entrepreneurs know how beneficial it is to have a plan with deadlines or milestones so that the company readily builds momentum. Otherwise, it’s all too easy to sit around twiddling your thumbs expecting things to magically happen. It’s how traders and entrepreneurs both get burnt out after “working” for a year and having nothing to show for it.
In short, if you’ve got some spare time kicking around before you really dig into your entrepreneurial goals, try forex trading. Consider it your start-up warm-up.
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