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May the 4th be with you! On this unique day, we celebrate all things Star Wars. However, did you know that there are some striking similarities between this galaxy far, far away, and the world of forex trading?
Yes, you read that right! Gather up younglings, as we are about to show you 3 similarities between the space opera saga and the forex trader.
Key Points
- Traders must endure a challenging journey, similar to a Padawan’s path to Jedi Knighthood, to master trading disciplines and mental resilience.
- Traders can use Expert Advisors (EAs) to automate trades across various financial assets, mirroring the assistance droids provide in Star Wars.
- Forex traders should guard against greed and fear to prevent risky decisions and protect their capital, reminiscent of Anakin Skywalker’s downfall.
1. Road to Jedi Knight Status
To reach the rank of a Jedi Knight, a Padawan must go through a difficult learning journey to hone various skillsets and fortify their minds.
Likewise, in order to become an experienced trader, you stand to go on a roller-coaster journey with countless of ups and downs. It would take a great deal of discipline to build trading abilities and mental fortitude that match a “Jedi Knight” in forex trading.
This is akin to the training that Padawans undergo in order to become full-fledged Knights.
2. Forex’s Own R2D2
What would Star Wars be without a trusted robot sidekick? Obi-Wan Kenobi had R4-P17 and Din Djarin formed a bond with IG-11, but the most reliable of them all would be Anakin and Luke Skywalker’s R2D2. Traders in the real world can have their own trusty robot sidekick too, commonly known as “Expert Advisors” (EA).
EAs are used by traders who want to automate trading processes and basic technical indicator signals using algorithms. In the world of forex, there are various EAs to choose from, so there is definitely a sidekick made just for you.
At Vantage, traders can equip their EAs to trade financial assets such as Forex, Commodities, Indices, and Stocks through CFDs.
3. Don’t Be Anakin
In the Star Wars prequel trilogy, Anakin Skywalker went down the path of the dark side, a self-destructive journey fuelled by negative emotions such as fear and greed. In forex trading, it is dangerously tempting to turn to the “dark side” as well, where greed and fear take control, leading you to make costly decisions in trading.
Greed and fear in forex trading manifest themselves in the form of over-leveraging and over-trading. Traders overleverage their positions as many of them view forex trading as a way to earn easy and quick money. On the other hand, there are individuals who overtrade due to fear that a trading opportunity would slip away and never come back. Without a proper risk management mindset in place, trading with greed and fear could lead to the huge losses within a short period of time.
It is crucial to stave off the aforementioned negative emotions if traders were to seek long-term success. When a trader turns to the dark side, forex trading becomes highly risky and could cause you to lose your capital very quickly.
“Fear is the path to the dark side.” – Yoda
4. Determine your Risk Tolerance
Just as Jedi must know their own strength and limitations, a forex trader must understand their personal risk tolerance.
It’s essential for traders to understand how much volatility one can handle without being overwhelmed. This process involves identifying how much capital one is willing to risk on a single trade (this means considering the potential of losing it all), and setting stop-loss orders to prevent devastating losses.
By determining their risk tolerance, traders can better navigate the turbulent waters of forex markets, much like Jedi navigating through the challenges of the galaxy.
5. Harness the Force of Market Analysis
In the Star Wars universe, Jedi harnesses the Force to gain insight and achieve greater awareness of their surroundings. Similarly, successful forex traders harness the power of market analysis to anticipate movements and make informed decisions. This involves a deep understanding of both fundamental and technical analysis.
Fundamental analysis looks at economic indicators, while technical analysis focuses on historical price movements and chart patterns. By mastering these techniques, traders can feel the pulse of the market, akin to Jedi feeling the flow of the Force.
“The most difficult trial a Jedi must face is to look inside oneself. Often we see things we don’t like, but these aspects are not set in stone. It is our decisions that shape our destinies”. – Obi Wan Kenobi
6. Embrace the Jedi Council’s Wisdom
Just as the Jedi Council guides young Padawans with the accumulated wisdom of many generations, forex traders can also seek guidance from experienced mentors and the collective wisdom of the trading community.
Learning from the successes and failures of seasoned traders can provide invaluable insights in the learning curve. Joining trading forums, attending webinars, and taking educational courses are ways to absorb knowledge that can lead to prosperous trading strategies, much like the strategic planning undertaken by the Jedi Council in their quest to maintain peace and order in the galaxy.
Conclusion
To prevent turning to the dark side, traders must fortify their minds through constant learning and discipline. It is also important to receive proper guidance from professionals as novice learns to trade, much like how Obi-Wan Kenobi guided Luke Skywalker through the Force and the ways of the Jedi. As such, Vantage offers guidance and educational support for traders of all levels of expertise.
Vantage’s free educational webinars are conducted weekly by industry professionals. This helps traders to stay up to date with the latest market events, hone their trading and chart analysis skills, and discover new trading features and tools. Looking to practise trading the financial markets? Sign up for a demo account here.
