Pick up any book on trading and you'll see that discipline is an absolutely essential element of profitable forex currency trading. This specific aspect of trading is also one of the biggest challenges for most traders, even sometimes for those that have been trading the currency markets for years.
Use these 3 simple steps to double your discipline in very short order. Don't underestimate this method. While it won't solve every discipline challenge you may encounter, it will move you in the right direction and it is possible to double your discipline very quickly.
Step one: Be aware while you're in the moment. In the moment when you find yourself tempted to deviate from your trading plan, ask yourself this simple question: "Am I thinking about doing this out of emotion here or would this be congruent with my better judgment?" Being aware of how you're feeling - at the time - is what is key, and then asking yourself the question. Often, the mistake occurs because we simply are getting caught up in our emotions and the simple act of staying aware the emotional surge will help to keep things in control. Awareness is only the first step though.
Step two: Realize where the real problem stems from. Usually the urge to deviate from your trading plan is because of a fear. Here are a couple examples.
* Entering or staying in a trade when you know that you shouldn't often comes from being afraid of missing out on an chance to profit. What is often incorrectly attributed to greed is often a scarcity mindset coming into play. The fear of saying "No" demonstrates the fear that there "isn't another bus coming soon". When you don't have the certainty that there are numerous profitable opportunities to be capitalized on and that you have the know-how to take advantage of them, then the fear arises in the moment.
* Failing to enter a trade is often the fear of making a mistake more so than the fear of loss. On the surface it feels like the fear of loss, but the risk on any given trade is easily foreseeable. This one is an issue of self-doubt due to past errors.
In reviewing the examples above, you may have noticed a common underlying factor. There is a way to eliminate fear, and the third step is to address this specifically.
Step three: the most effective way to eliminate fear is through building your confidence. Your daily life is full of risk and yet you can function will amidst this risk without any fear all. Why? Because you have the confidence to deal with it effectively. When you drive your car, go out in public, walk down a flight of stairs, you have no fear. You have developed the skills to do these things and do them well and without getting hurt. The potential for harm is there, but you have the confidence to handle these situations.
Forex currency trading is a fairly simple activity compared with other professions, particularly with the technology available in today's world. It is certainly within your abilities, and as you broaden your knowledge of and build your skills, you'll find that your fears subside as your confidence grows. The challenge then becomes how to properly go about building your confidence - real confidence, not just bravery.
Real confidence comes from awareness, education, competence, practice, measurement of results and feedback for continuous improvement. Forex currency trading involves a substantial body of knowledge and a respectable skill set to be developed to trade confidently. Unfortunately, most traders are not given the information when they start out to even know what they need to work on to become that successful trader that they envisioned at the beginning of their Forex trading career.
Failing to stick to your system is but one of the many mistakes currency traders make that create losses and anguish. By understanding the root of the mistakes and having specific actions to take to avoid them, you can be a more consistent and profitable trader. There are more than 39 trading mistakes listed in the book, "The Subtle Trap of Trading" along with particular actions you can take to keep from making them. When you understand where mistakes originate, you will find that your forex currency trading is both more profitable and lower in stress.
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