Forex trading is a craft that demands a certain level of discipline. Not only do you have to stick to a set of trading rules, you also have to be able to keep your eyes on the prize at all times. This is what seasoned traders refer to as self-discipline.
Mark Douglas, author of Trading in the Zone, defines self-discipline as “a mental technique to redirect our focus of attention to the object of our goal or desire, when that goal or desire conflicts with some other component of our mental environment.”
Say what?!
Simply put, self-discipline involves the development of a mental framework which enables you to stay motivated and focused amidst conflicts and mistakes. You have to be able to rid yourself of the negative vibes associated with setbacks without having to learn yoga.
Self-discipline is NOT a trait that you are born with. It’s not a talent exclusive to an elite few either. Anyone can practice self-discipline, but it ain’t as easy as it sounds.
Every endeavor that you take will always be difficult in the beginning. This is especially true in forex trading. Your interest and enthusiasm for the industry will be tested once you start to experience strings of losses.
While losing is as much part of trading as winning, it can can be very disheartening and may even cause you to stop trading currencies altogether.
This is where self-discipline comes in. Developing discipline is difficult, but it is a necessary and important trait for any trader whose goal is to someday become consistently profitable.
Now, it isn’t enough to sit in front of the computer every day, take a trade, and hope for the best. You must have a target or a goal in mind. Without any goal in place, you may get stuck in that state of discouragement as you have nothing to strive for or work towards.
Having a specific and tangible goal is the first step towards developing self-discipline, as it will give you the motivation to get through trading each day.
Another good technique to practice self-discipline is to keep a detailed trading journal.
I am a strong advocate of having one because it can provide great insight into your progress towards attaining your goal. It can also help you stay motivated and track your progress and lets you know whether you are improving or not.
Once you have reached your goal, take some time to look back and think about what you had to go through in order to attain it. What were the factors that pushed you to reach your goals? Chances are that self-discipline will be at the top of the list.
Here are tips to help you develop self-discipline in trading:
1. Keep the end in mind.
The first step into becoming a more disciplined trader is to set a clear-cut goal. As I’ve said, there will be times when you will feel disheartened, but having your eyes fixed on the prize could keep you from quitting.
Don’t get too carried away in setting your goals though. Not-so-realistic ones, such as earning a billion dollars at the end of your first year of trading, can actually be more detrimental.
I’ve discussed proper goal-setting before and you just have to keep in mind that a goal only needs to have two characteristics: It should be clear and realizable. So aside from your wanting to be a billionaire so freakin’ bad, I don’t think a vague “I wanna to be successful in trading” goal will work either.
Examples of reasonable goals could be gunning for a 1% gain each week or maintaining a 60% win rate.
2. Direct your attention to what needs to be done.
After coming up with a clear goal, you are immediately a step closer to becoming more disciplined. Snaps to you! At this point, it’s already easier for you direct your attention to what needs to be done.
For instance, your goal is to let your winners run and protect your profits at the same time. Keeping this in mind, you’d probably begin putting trailing stops on your trades.
On the contrary, if you’re stuck with a broad objective, you would probably end up wasting a lot of energy in pondering what you should do. This would consequently make it you more vulnerable to your emotions. Err, you don’t want that to happen, do you?
3. Drive the negative vibes away.
After formulating your goal and taking the necessary steps to achieving them, start monitoring your progress.
Remember that it’s easy to get lost in the motions of the market. This is why it’s important for you to have something to hold on to such as your trading stats in times when minor setbacks force you to doubt yourself.
If your numbers tell you that you’re actually doing well and you just had an off day in the market, then just shrug of the negative vibes. Worrying about nothing will lead you nowhere!
But what if it wasn’t just a bad day? Regardless, having a clear-cut goal will make it easier for you to stay motivated and redirect your attention to what you need to do.
Keep these in mind and soon, being a disciplined trader come effortlessly because it will already have become a part of your mental framework!