All Forex advisors will tell you that it is of the utmost importance to be disciplined in your Forex trading. The two most important qualities to have as a Forex trader are patience and discipline. These will serve you well again and again in the Forex market.
Discipline in testing your plan, making sure it works well, tweaking it when necessary and testing it with historical data to see how you would have performed had you used this trading plan last year is key to Forex success. Being a disciplined trader means doing your homework, even when you don’t want to. Checking tables and charts daily and being on top of current events is not easy but it will make you a much more successful Forex trader.
Making a commitment to learning how to trade profitably, honing those skills and perfecting your plan is what will make your trading successful and honoring that commitment is called discipline. Commitment and discipline are intimately connected and are essential to successful Forex Trading.
There are some basic rules you need to follow in order to be a disciplined trader. Each of these rules has work associated with it. Forex takes work in order to be a winner. Get rich quick almost never works. Slow and steady wins the race is usually the way to become a winner in the Forex market. Start slowly and make sure you follow the rules and you can be a big winner. Trade emotionally without much thought or foresight and you are more likely to lose.
Making your Stop-Loss an absolute is a big part of Trading Discipline. When you adopt a stop loss and aren’t disciplined enough to stick to it you will most likely lose. The purpose of the stop loss is to protect you and when you don’t use that protection it will only hurt you. Letting your emotions get in the way and ignoring your stop-loss will be detrimental. Before you commit to a trade, you should know your expectations and limitations.
Pay attention to your trading schedule and stick to it. Impulsive trading as a market is closing is not disciplined and will most likely lose. To prevent this you should also give yourself maximum numbers of trades per time period. These limits can be daily, monthly or weekly depending on the type of trading you do. If your trading strategy includes trades that depend on currencies that operate on a predictable schedule, then stick to that schedule.
The biggest mistake made by inexperienced traders is trading based on emotion instead of plans. It takes a lot of discipline and self control to fight the urges to trade based on being swept up in the desire to win or the fear of loss. Our emotions and impulses are very strong when it comes to money and that makes it even harder to keep them in check. Once a trader learns to curb these feelings and hold themselves to their plan, acting in a measured, disciplined manner they will be a more successful Forex trader.