The simple trick you can play on yourself, to immediately become a highly disciplined FX trader

Feb 1 • Forex Trading Articles • 783 Views • Comments Off on The simple trick you can play on yourself, to immediately become a highly disciplined FX trader

FX traders constantly receive advice regarding professionalism and discipline, in relation to trading and how these two factors can impact on your success. Retail FX traders will receive advice over the type of FX trading account they should open and which brokers they should trade with. For example, trading with an ECN broker, who uses an STP access method and opening an account with zero fees, is considered to be the right first step, or next step, to progress your FX trading. Taking such measures should be regarded as an immediate indication of your overall levels of: professionalism, discipline, self respect and respect for the industry.

Discipline, in relation to retail trading, can take many forms, it can encompass: the times you trade, the trading plan you develop (and more importantly stick to), the strategy you employ (which you never violate) and the level of self control you develop, to ensure your emotions are in check. The benefits of attaching discipline to your trading and becoming a highly disciplined trader, are significant and can’t be underestimated.

Your trading plan is a construct in which you can embed all your professionalism and discipline, it is arguably the single most important bedrock, from which to build you trading career. Creating a robust trading plan and continuing to refine it over time, will indirectly help improve your discipline and professionalism; if you fail to plan, you plan to fail and if you fail to create a trading plan, you could be (unwittingly) planning to fail at trading.

What to place in your trading plan is far more straightforward than most novice and intermediate level traders realise, it doesn’t have to be an onerous exercise. The initial trading plan doesn’t take weeks to compose, it only takes hours and it forms a base from which to potentially build a successful trading career. It should principally contain your trading method and your trading strategy, these two factors are different, but closely aligned.

Your trading method is how you describe your trading style, are you a: scalper, day trader, swing trader, or position trader. Across the spectrum of options you have, do you trade off low, or high time frames? This decision will also indirectly the times of day you’ll decide to trade. Scalpers and day traders might trade full time and closely monitor the market during all times of the day, across the distinct trading sessions, whilst isolating certain times of the day to trade. Or they may only trade when high impact calendar events are due to be published, perhaps they alert themselves to upcoming events by way of setting alarms. Whereas, swing traders might attach a different form of discipline; making time to check their charts at regular intervals throughout the day, or they might place alerts on their charts, to make them aware of any rapid, or significant changes in price and market conditions.

The strategy you create is a different aspect of your trading plan, but also encourages high levels of discipline. Your strategy will encompass factors such as: the currency pairs and other securities you trade, the stops and take profit limit orders you attach to every trade you take, any circuit breaker you employ, the risk per trade you take and whether you use any technical indicators to trade off.

You could decide to possibly only trade the major currency pairs, or indices, you could place stops on each trade limiting your risk and potential loss to perhaps 0.5% account size per trade. You could place take profit limit orders of perhaps 1% on every trade. And you could place a limit on any losses per trading day to perhaps 2% per day; you’ll mentally lock yourself out of your platform if you lose four trades in series, at 0.5% loss. These measures will immediately elevate your levels of discipline and professionalism.

Once you’ve established these core aspects of your strategy and matched them to your trading method, with both elements embedded into your trading plan, whilst creating your own set of rules which you’re determined not to violate, you’re behaving like a professional, institutional level trader. By taking such a simple measure as creating a plan, you’ve indirectly played a trick on yourself; you’ve immediately altered your trader mindset and placed your trading future on the right path of potential success and profitability.

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