Why Trading Discipline Is The Key To Profitability
What’s wrong with deviating from your forex trading plan if you make a profit anyway?
Making an occasional winning trade, even when you throw your trading plan out the window, may provide short-term pleasure, but entering trades haphazardly can adversely influence your ability to maintain discipline in the long term.
Trading is a marathon, not a sprint!
When you stop following your trading plan, you become rewarded for lacking discipline and you may start believing that abandoning a trading plan is no big deal.
An unjustified reward may increase your tendency to abandon trading plans in the future.
You may be prone to think “I was rewarded once, maybe I will be rewarded again. I’ll take a chance.”
But the positive outcomes of undisciplined trading are usually short-lived, and a lack of discipline ultimately produces the long-term trading losses.
It’s important to distinguish justified wins from unjustified wins.
A justified win is when you create a very detailed trading plan and FOLLOW the plan. A win that results from following a trading plan is justified and reinforces discipline.
An unjustified win occurs when you make a plan but don’t follow it or if you have no plan at all. You might be rewarded, but the outcome occurred by chance.
You might as well flip a coin or hang a printed copy of your charts on the wall and throw darts at it to help you make trading decisions. The win is unjustified and can reinforce undisciplined trading.
Maintaining discipline is vital for consistent and profitable trading.
You trade proven forex trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit.
It’s like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. Just look at some of the most successful athletes in the world.
The winning player is the person who first develops the skill to make the shot consistently so that at every possible opportunity, the ball is likely to go through the basket or goal posts.
They’ve developed the skill to learn how to shoot the ball the same way every single time. Consistency is crucial!
It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade.
If you trade one approach this time, and a different approach at another time, your performance will more than likely be haphazard.
If you follow the plan sometimes and abandon it at other times, you throw off the probabilities, and you will most likely end up losing overall.
3 Tips To Help You With Building Your Discipline
1. Remain Consistent At All Times
Don’t let unjustified wins interfere with your ability to maintain discipline.
2. Follow Your Own Trading Plan
Follow your trading plan and cement in the mindset that if you follow your plan, you will end up more profitable in the long run.
3. Have A Clearly Defined Goal
Have clearly defined goals for all your trades. Know when you will exit a trade and set your profit targets. It is very important to understand goal setting in forex trading and pairing it with a consistent risk to reward ratio.
Happy Trading
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Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
