It's a given that forex trading discipline leads to trading success. Successful forex traders not only have strict rules for trading but they also adhere to them come what may. Seasoned traders who are resilient enough to survive market reversals and are consistently profitable develop positive trading habits. Inculcating discipline may seem difficult at the outset, but it is an indispensable attribute if you take forex trading seriously. Here are few steps via which you can evolve into a more disciplined trader:
1. Make Stop Losses a Habit:
Setting a stop-loss enables you to follow a more disciplined approach bereft of any emotions. Regardless of your trading experience you should always know your profit target before embarking on any trade. Thus before opening any trading position you must know precisely at which point you should place your stop-loss. Once this is done you must not lower it by any means in order to keep your position open.
It is common psychology that the more you trade the more you will tend to feel that your losing positions may yield gains. This is where a stop-loss comes in to automatically end a position and prevent you from overtrading. Likewise you can set a take-profit point for every trade and then refrain from altering it.
2. Be Patient:
Once you execute any trades nothing should prompt you to harbour any doubts about your approach. Markets are dynamic and sudden movements should not send you into a panic mode and jump into conclusions. Most amateur forex traders have a propensity to close trades prematurely with less profits or fearing losses when there is the potential to earn bigger gains. Thus, as a forex trader you should be patient for your trades to yield favourable results. You should know what is the maximum loss you are willing to withstand or the minimum profit you are expecting. Forex trading is not a get-rich-quick scheme. Only patience pays here.
3. Don't Be Afraid or Overtrade Either:
Confident forex traders know exactly what they are doing. Thus, they don't fret over their strategies. If your proven trading system and market analysis indicates that you take a certain trade you have to go with the market flow. In order to perform in the market, you have to be in it. Again, if a particular trade is not going anywhere don't waste your time in vain. Either get out of it or set a stop loss so that you incur only negligible losses instead of a losing spree that exhausts your capital. Move on to another trade and live to trade another session.
4. Develop a Trading Routine:
Another important aspect of forex trading discipline is developing and adhering to a trading regimen. By habitually beginning your average trading day in the same way every morning helps you to stick to essential habits like reading the charts, economic indicators etc thereby ensuring discipline. Also, as part of your disciplined approach determine in advance about your choice of trading style- be it intraday trading , swing trading or maybe scalping, how many trades you can take in a day, week or even a month. All these things help you in being organised and sorted.
5. Form Your Individual Trading Style:
While trading, your style or approach matters. A particular strategy may work well for someone while it may be quite a struggle in your case. Thus the importance of identifying and adopting a trading style that fits your individual goals and requirements cannot be ruled out. If you are comfortable with a particular asset, approach or lot size by all means go for it. By doing so you will be more at ease and be able to make money too.
Hence once you make positive Forex trading habits an integral part of your trading process and develop trading discipline you will begin to enjoy your trades, be more confident, lose less money and get more consistent returns over time. It will be easier for you to stay focused and trading will become less of a drudgery and more of an exciting exercise that you will start eagerly looking forward to.