It is easy to lose yourself in the chaos of the foreign exchange market. But why? If you compare other financial markets and something like the crypto market with forex, there are mere ponds and lakes against the vast ocean of forex. Trillions of dollars are being moved in this market after all.
So when things get a bit hectic, it is so easy to lose your cool. The only way to make the most amount of profits in a sustainable way is to keep a level head.
Please note that sustainability is key here. We are not talking about winning just a handful of trades. You are on this journey for the long haul. So to keep trading in forex and always landing on your feet, you need to be stoic and practice discipline.
As always, it is easier said than done. But in this article we want to give you 10 easy steps to follow to develop discipline and benefit from its many advantages as a trader.
The Role of Discipline in Forex Trading
First of all, you need to know that discipline is not an innate and natural skill. Some people may be predisposed to having a higher degree of self will and discipline than others. But everyone can learn to develop this valuable trait for themselves.
Although, there are many skills and techniques that are required to have a successful trading experience, success in forex can be boiled down to two main steps:
- First to develop a good trading plan
- Second to have the discipline to stick to your plan under any market condition
When you eventually gain enough experience to develop a sound and profitable trading plan, you will need the discipline to stick to it.
A disciplined trader will also have the courage and strength to keep trading and moving forward even after facing losses, which is inevitable for all traders.
What Happens If You Don’t Practice Discipline in Forex?
On the flip side, if a forex trader does not have enough discipline or does not know how to implement discipline in trading, there could be many disadvantages.
One particular downside is that you might overtrade. Having a goal and target in mind is crucially important. You need to know when to stop. Overtrading can lead to otherwise avoidable losses.
Furthermore, not having the necessary self-control will lead you to make bad and ill-informed decisions.
These incorrect decisions get especially bold and damaging when the market goes through volatile waves.
10 Simple Rules to Develop Your Discipline as a Forex Trader
As a forex trader, you now know the vital importance of discipline in the forex market. Here are 10 simple rules to follow in order to develop your discipline:
Always Have a Trading Plan
You should never go out into battle without the proper ammunition and strategies. In forex, your trading plan is the most important precaution you can have, among other things. A well thought out and carefully detailed trading plan can ensure you make the correct decision under any market condition.
Go Against the Herd
As more people, especially young people, are being drawn to financial markets such as forex, it is easy to see a certain form of group mentality that takes hold of the trader communities at different times. The herd might push you to make certain decisions and take certain actions that may not be in your best interest. Learn to go against the herd and not be persuaded easily by peer pressure.
Be Cautious of Self-Professed Market “Experts”
Just by a simple search on social media platforms such as Twitter and Instagram, you can find countless self-professed forex experts who claim to have knowledge of profitable signals which they can share with traders. Some of these so-called experts sell these signals. Others only cost you your time and attention. In any case, be very weary of these self-proclaimed experts, because they can steer you in the wrong direction. Especially if some of them go viral due to their content, it might be easier to be fooled by them. So watch out!
Never Abandon Your Rules
As mentioned, having a trading plan is one of the most significant steps of trading in forex. But merely having rules is not enough. You must stick to your rules no matter what. Of course, if there are actual errors in your trading plan and trading routine, then they ought to be fixed and adjusted. But in general, given that you have chosen the right rules, then you need to stay by their side no matter what happens.
Learn to Accept Losses
It doesn’t matter how disciplined you become, loss is inevitable. You can be the most stoic and collected trader ever, but still there are times that you lose. You need to learn to make your peace with loss and be able to accept it and move on.
Rely on Your Intuition Carefully
When we talk about sticking to your rules and plans strictly, it doesn’t mean that you should become robotic in a way and abandon all your subjectivity. On the contrary. You can also benefit from discipline in relying on your intuition. Of course, with a great degree of cautiousness.
Develop an Optimistic Outlook
Having a negative mindset does not equate to discipline. Unfortunately, many people think that being pessimistic is the same as being realistic. This is not true. You can be disciplined, i.e. realistic, and optimistic at the same time. In fact, they can complement each other. So learn to develop a positive outlook as a trader.
Pay Attention to Warning Signs
There are always warning signs that might go unnoticed if you don’t have the disciplined mind it takes to detect them. Learn to pay attention to warning signs in the market that foretell a reversal or an unfavorable turn in prices.
Don’t Take Shortcuts
No one becomes a professional trader overnight. You simply cannot learn how to be an experienced trader without the actual experiences. So don’t try to take shortcuts. Accept that you need to put in the time, you need to persevere, and you need to be patient in order to obtain the necessary experience and knowledge of trading.
Trading Is a Journey Not a Destination
Remember our keyword? Sustainability. Sustainability. Sustainability. There is not just one trade that you can make and be done with it. There is no destination. Trading is a journey. Profiting in forex is the accumulation of many and many correct decisions and winning trades.
In order to have a considerable number of wins over losses in an extended period of time in the forex market, you need to be very patient and practice discipline. After all, that should be the aim of any trader. To have more wins than losses.
And the only way you can guarantee to be a winner in forex is to have enough discipline to never give up no matter how hard things get. This is why in this article, we showed you how you can actually develop self-control in order to practice discipline in trading.