Discipline: The Key to Successful Forex Trading

Discipline. We hear that word all the time and know that having it is important in most every area of our lives but what does it mean to the forex trader? In short, it means the difference between failure and success.

Any trading strategy or investment plan, no matter how good it looks on paper or how well it has worked for someone else, is worthless without proper execution of that plan. That sounds easy, but if it was easy 90% of forex traders wouldn't fail. It isn't the system or insider knowledge or any other secret that makes the 10% successful when all the others are wiped out in a month. It's discipline.

Begin with your trading strategy. If you don't have one, get one. There are many resources devoted to this topic and forums where you can talk to experienced traders to learn their strategies, adapting the information you learn to create your own detailed strategy that suits your style that you know you can follow. For example, don't think you can implement the strategy of a day trader when your lifestyle won't allow you to follow the markets 24 hours a day.

Write your strategy down in detail and keep it in front of you. Write down every detail of when you will enter a trade and when you will exit. Define a stop loss and profit target, exact criteria and solid rules that you will not stray from. Then follow those rules. Every time. Even if it takes staring at the screen for hours watching the market and waiting, letting trades go that don't exactly fit your rules, setting a stop loss and accepting the loss, sticking with your proven system through a string of losing trades and studying the market every day.

Easier said than done when emotions get in the way.

Trading is filled with emotions, the movement of the markets is based on them. Greed and fear. The high and excitement of a profitable trade, the discouragement or even anger at the losing trade. The fear of loss. You wouldn't be human if you didn't feel all of these emotions. The discipline is not letting them rule you or even enter into your trades at all.

One of the strongest emotions is fear of losing money. Most people through the whole of their lives have learned to associate money with security, feelings of self worth, prosperity and freedom. The threat of a loss of money can trigger that defense mechanism that could lead to the premature exit of a profitable position before the exit signal generated by your trading system. It could also lead you to not take a signal if you've had a series of losing trades..

The flip side, but equally powerful and motivating, is greed. It can cause you to hold your position longer than your trading system dictates, beyond the time the exit signal is generated. It can make you open a position without an entry signal from your system or cause you to violate your money management system by increasing your position amount after winning trades.

Your goal is not the quick profit but consistency in your trading system performance and confidence that you will achieve your profit objectives if you strictly follow your system. You've tested it with your demo accounts and refined it so trust it and trust yourself.

Using a forex trading mechanical trading system you can solve all problems caused by your emotions by automating the trading process. By following the professionally created trading system, the beginning trader will gain confidence and thus apply that discipline that is so hard for many to overcome.

Confidence in your trading and money management systems will force you to follow them. Without that confidence you will certainly deviate from them with negative consequences to your financial and emotional well-being. Success will only come when you take each and every signal your system generates to build your confidence in it. That will strengthen your discipline help you stick to the system during the inevitable losing streaks.

There is no such thing as a perfect trading system. Foreign currency trading is a game of probabilities so as long as you stick to a proven method you will reach your profit objective in time. Learn to treat wins and losses with the same emotional detachment by shifting your emotions from the price to the system and how well you are following it.

The mastery of emotion is a long and difficult road which is why beginning traders are encouraged to automate trading systems. Confidence, discipline, success.