Successful forex traders have rock solid discipline. They plan every one of their trades, then they simply trade their plans.
It may be tempting to trade by the seat of your pants, but if you don’t develop clearly defined trading plans to follow, and follow them consistently, you’ll have difficulty making consistent money as a trader.
What’s wrong with deviating from your forex trading plan if you make a profit anyway?
Making an occasional winning trade, even when you threw your trading plan out the window, may provide short-term pleasure, but shooting from the hip can adversely influence your ability to maintain discipline in the long term.
When you stop following your trading plan, you become rewarded for a lack of 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 forex trading losses.
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 drift from or completely ditch the plan. 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 forex trading. Trading is a matter of getting the law of averages to work in your favour.
You trade proven 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.
Consistency is key!
The winning trader is one 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.
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 likely be all over the place, too.
What’s more, you’ll have a more difficult time pinpointing which strategy works and which don’t.
With discipline comes profitability.
Don’t let unjustified wins interfere with your ability to maintain discipline.
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.