How to practice discipline in trading
Discipline is an integral part of any forex trading strategy. Without discipline, a solid trading system and proper risk management rules lose all of their value. The good news is that – with some willpower on the trader’s part – discipline can be mastered.
This involves carefully studying the forex markets – especially the ones you are trading – and mastering your self-control. In order to maintain discipline, you must practice patience and be able to control common emotional impulses like greed and fear. In more technical terms, proper discipline involves having and sticking to a trading plan. Create a schedule for your trading and know what signals will help to decide to enter or exit a trade. Ensure that you apply proper risk management by sticking to your stop loss and take profit orders.
If you follow the rules without trying to “outsmart” the market, you will discover that discipline is a prerequisite for success.
These rules will enable you to have some control over your trading. Defined guildelines like the time of day and which session to trade will also give you distinct boundaries
It is always important to know why you are entering into a trade - does the trade meet your strategy rules? If you are correct and the trade goes into profit - what is your price target? If you are wrong and the trade is losing money - what is your stop-loss level?
Understanding and managing your rist on every trade is essential. This is especially important when markets are volatile.
Don't let wishful thinking - known as confirmation bias - skew your thinking. You must have the control to accept the evidence and execute your rules.
How can I improve my forex trading skills?
Analysis is a key part of a trader's day. Firstly, that means self-analysis about your own performance and results. Many traders keep a trading journal to help with this. Secondly, regularly monitor the markets you trade. This includes looking at both technical and fundamental factors that might affect your trades, throughout the day.
How can I improve my forex trading discipline?
Keeping and maintaining short-term and long-term goals can help you on your journey to becoming more disciplined. Trading at a time of day when you are most alert is important. Being confident and calm will also help. Studies have even shown that being well-fed and comfortable helps traders maintain their discipline.
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.
