When you get on your journey as a trader, there are many things you need to keep an eye on in trading . This means it takes quite a bit of maintenance to make sure you can sustainably reap the benefits of trading. One of those maintenance steps that you need to take is keeping your focus and not being distracted by the profits that you get or even the losses that you might sustain.
This is part of the discipline of being a trader in the forex market or other financial market. And to elaborate on this matter more, we want to show you exactly how and why you should stay focused on the process of trading itself rather than the profits or losses associated with it.
So read along to find out how you can become a more disciplined trader.
Why Should You Stay Focused and Disciplined in Trading?
As we mentioned in the intro, in this article we want to discuss the importance of remaining focused and disciplined in your trading process and we will show you how. But first let’s talk about the why of this matter.
The reason so many experts and economists believe the key to long term and sustainable success is through remaining focused and disciplined can be seen in the fact that trading is all about decision making.
Imagine high frequency trading or scalping where you have to make decisions in a matter of minutes or even seconds. If your mind is not focused on the trade you are making at the moment, then you will not be able to make the right decision.
Being a disciplined trader also pays off when you are sustaining loss and even when you are obtaining profits.
In the matter of loss, focus will get you through the loss and to the other side where you can recuperate and adjust your trading strategy for future trades. In this way you are not crushed by the loss that every trader will sooner or later experience.
And in the matter of profiting, focus will help you not get carried away when you are indeed making good money as a trader or even in a single position. When a certain position starts going into profit, traders might get greedy and keep the position open hoping that profits will just keep coming. But this greed will be the downfall of their position on many occasions. But luckily with discipline you can also avoid this conundrum.
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How to Be a Disciplined Trader
What is the key to obtaining discipline? There are many steps you can take, but we can boil down the best advice into four actionable steps.
Step 1: one proven way with the help of which you can develop and increase your discipline in through learning and improving as a trader. When you learn more and more, in fact when you are always learning, it means you are always tweaking the little mistakes that lead to wrong decisions while trading. In this way you gradually begin to build up discipline and become a better decision maker.
Step 2: Another useful step is to work on your own mindset and psychology. There are many exercises that can help you obtain peace and tranquility of mind and have a clear and precise mindset in trading. You can take breaks from trading every now and then and do meditation exercises that help with your mindset. Or you can read psychology books and in that way improve your mentality and achieve mental focus.
Step 3: having a trading plan is another step that can be a huge help in obtaining discipline. But remember that your trading plan needs to be as thorough and detailed as possible. In this way no matter what happens in the process of trading you are already prepared for it and therefore you make the right decisions that are needed for that moment.
Step 4: keeping a trading journal is perhaps the coup de grace in this battle for discipline because it means keeping a journal and jotting down every single detail related to all of your trades. This will give you a chance to analyze retrospectively and fix any part of your trading approach that needs improvement and adjustment.
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Is It Bad to Focus on Profit and Loss?
You might think it is counterintuitive to say that you shouldn’t focus on profit and loss. After all, isn’t that the most important thing in trading?
While that is true to some extent, there is another side that is just as important. When your entire focus in trading is on profit or loss it will take away the big picture from you and in this way you will get tunnel vision. This means you will no longer be able to see the wide scale of things and make the right decision by considering different factors and aspects that ought to be taken into account.
Imagine your position has gone into loss and you’re losing money on it. Or it can even be a series of losses in a number of trades in succession. When you only focus on the loss that is in front of you, it will only give you fear. In this case you might decide to pull your capital out of the market entirely. But the thing is that loss can be momentarily and you might just be a certain number of trades away from a hugely profitable one.
On the other hand, focusing only on profits can also be a damaging approach since it will definitely make you greedy and give you a sense of overconfidence that you know everything about trading and the market. But it is exactly at these moments that you need to remain focused on the long term goal and not let emotions and excitement of profits lead to wrong decision making outcomes.
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Conclusion
Anything that is good in life is only good if it is sustainable. The same is true with trading. As a trader you need to have a long term view of trading, where you can sustainably make money through it. This can only be achieved by remaining focused on the process of trading itself and not giving too much attention to profit and loss. In this article we showed you how and why you should be a disciplined trader.
