Pick up any book on trading and you’ll find that discipline is an absolutely critical element of profitable forex currency trading. This particular aspect of trading is also one of the biggest obstacles for most traders, even sometimes for those that have been trading the currency markets for quite a long time.
Utilize 3 simple steps to double your discipline almost immediately. Don’t dismiss this method. Even though it won’t solve every discipline challenge you may run into, it will take you in the right direction and you really can double your discipline very quickly.
Step one: Be aware while you’re in the moment. At the moment when you feel the urge to deviate from your trading plan, ask yourself this simple question: “Am I acting on emotion here or would this be in alignment 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 happens because we simply are allowing our emotions to drive our actions and the simple act of staying alert to the emotional surge will help to keep matters in perspective. Awareness is only the first step though.
Step two: Realize the real cause of the problem. Usually the urge to deviate from your trading plan is because of a fear. Here are a couple examples.
* Getting into or staying in a trade when you know that you shouldn’t often comes from the fear of missing an chance to profit. What is often incorrectly attributed to greed is often a scarcity mindset coming into play. The failure to say “No” shows the fear that there “isn’t another bus coming soon”. When you don’t have the certainty that there are numerous profitable opportunties to be capitalized on and that you have the ability to take advantage of them, then the fear arises in the moment.
* Hesitating to pull the trigger is often the fear of screwing up more so than the fear of loss. Superficially it feels like the fear of loss, but the risk on any given trade can be foreseen. This one is an issue of self-doubt stemming from previous mistakes.
In reviewing the examples above, you may have noticed a common underlying factor. There is a way to eliminate fear, and the 3rd step is to address this specifically.
Step three: the most effective way to counter 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 perform these activities 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 tools available in today’s world. It is certainly within your abilities, and as you broaden your knowledge of and develop 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.
True confidence comes from awareness, education, competence, practice, measurement of results and feedback for continuous improvement. Forex currency trading involves a significant body of knowledge and a respectable skill set to be developed to trade confidently. Unfortunately, many 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 Forex traders make that create losses and anguish. By knowing the cause of the mistakes and having specific actions to take to avoid them, you are empowered to be a more consistent and profitable trader. There are numerous trading mistakes listed in the book, “The Subtle Trap of Trading” along with specific actions you can take to avoid them. When you see where mistakes originate, you will find that your forex currency trading is both more consistent and much less stressful.
By: Brian McAboy
About the Author:
Is discipline a challenge for you in trading the Forex currency markets? Build real confidence with the resources you’ll find at http://insideouttrading.com The 80/20 rule applies strongly in Forex trading. Get the 20% that makes you a great trader, especially regarding Forex trading psychology. You’ll see and feel the results!
