Reading time: 8 minutes

The last few years have been a bit of a whirlwind for the forex trading community. Unprecedented global events, political uncertainty and a boom in tech innovation have resulted in a unique time for the industry. Covid-19 welcomed a new wave of traders as global lockdowns sparked a new era of trading fever. Traders have had no choice but to learn or lose over the last few years, flung into the deep end and tackling volatility from all angles. One thing is for sure, in the clear light of 2022 there are lessons to be learnt.

1. Prepare for the Unknown

Be ready. Homework is homework, but no one can predict the future. To survive as a forex trader in 2022, preparation is vital. This means keeping a cool head in times of uncertainty and not giving in to emotional intervention. As we’ve seen over the last few years with Brexit, Covid-19, and the more recent Russian invasion of Ukraine, global events have pinballed the forex markets as economic sentiment took a downturn. Despite meticulous technical analysis for days on end, traders can never be close to predicting the unforeseen circumstances of global events. So be ready, and have a trading strategy in place that effectively manages risk.

2. It’s The Edge That Matters

You will have heard of it before. It’s all about the edge. Developing an edge over the masses is the only ticket to success. Trading against the grain, and not falling for the herd mentality is a powerful way to start developing a sharper strategy; there’s a reason it’s called an edge after all. An edge can be a technique, method, risk-management approach or observation that helps create more informed decisions or helps work towards a more comprehensive long-term strategy. There’s a reason that most traders fail to grow a trading account over the long run: a lack of a defined, proven edge.

This might take time, and even longer to perfect – but it’s the only way to beat the volatile markets over the long term! Whether it’s honing on the price action of a particular currency pair, curating a strong risk/reward strategy to ensure your capital is protected and making sure you are emotionally detached from your trading decisions, there’s a lot to think about. One thing’s for sure, you won’t find your edge following an online herd of self-proclaimed gurus.

3. It’s Not About Wins & Losses

If you’re already a forex trader, you’ve likely experienced the rush of a big win. Similarly, you probably encountered the latter alternative: a soul-crushing defeat. However, any professional trader should be shaking their head in disappointment. Trading forex successfully over a long period requires some serious patience, dedication, and above all, willpower. Looking at your day trading career through a window of wins, losses or pips runs parallel to gambling, tied to an emotional seesaw that leads to traders chasing that next ‘big win’.

In 2022, traders are realising that above all else, market conditions can be vicious. Balancing wins against losses does work, but only with a rigorous risk/reward strategy. Simply topping up losses with occasional wins and vice versa will only result in a stagnant trading career with no plan for long-term capital growth. A successful trader might have a trading plan that allows for significantly more losses than wins, but with the right risk/reward strategy, a trader can still develop an ‘edge’ and be profitable over the long run. Losses should not be tormenting; they will remain an inevitable part of anyone’s trading career. The bottom line is to never chase a loss!

4. Money Needs Money!

Due to the digitalisation of currency trading, anyone can access the financial markets, breeding a modern wave of traders hedging their bets with a spare 100 USD, or even lower. Online communities, forex signals groups, and those selling courses often claim that it’s easy to turn your pocket change into life-changing capital. This is one of the first fallacies that new traders should be wary of. Think of the institutions, the hedge funds and experienced traders that aim for reasonable annual growth. Claims of 1000% account growth in a number of months should be met with complete scepticism. 2022 along with the last few years has been a whirlwind for even the most confident forex traders. The truth is, money makes money. Especially in times of economic uncertainty and market volatility, traders with a secure financial moat will fare significantly better than those protecting their last pennies on a dubious trade decision.