We all know that being a successful forex trader requires discipline, but what does discipline really mean? It’s more than just following a set of rules – although rules are important. Surprisingly, discipline in trading has a lot in common with discipline in life in general. Disciplined people have a methodical approach to their day – they get up at a certain time, set aside specific times in the day to do things, and make sure that they take care of themselves. The same principles will also serve you well in forex trading.
First of all, don’t make the mistake of spending all of your available time staring at charts. Instead, set aside a fixed period of time that you are going to do this every day. The best times to pick are just before the European markets open or just before New York closes. However, if you can’t choose these times because of personal and work commitments, pick another hour slot and make sure that you stick to it. Look for any setups on the currency pairs you are tracking, and if you don’t find any, then your work is done. Don’t spend hours on analysis to spot low-probability trading opportunities if there isn’t an obvious setup – you will just end up losing money.
A Guest Post by FXTM
Speaking of looking for setups, it’s also important to have a clearly defined trading plan that you follow. Don’t just have an idea in your head of what you are looking for – instead, write down a master plan that you can follow each day to look for entry signals as well as exit strategies. Your plan should also include how you will go about managing risk and remind you of your long-term objectives – so that you can look at each potential trade to see whether or not it truly fits into your overall market strategy.
Another key element of a successful trading routine is to keep a trading journal. However, you might be surprised why this is so important. Many trading books will tell you that you should use this so you can analyze your trades to find out what you did right or wrong, but in many cases this can be counterproductive since hindsight is always 20/20. The true value lies in understanding how well you have mastered your emotions – probably the single biggest factor in being a successful forex trader. Write down how you feel prior to making a trade, and then record your emotions again when you win or lose. If you do this, you will start to see how your emotional state affects your trading success – which will help you to control your emotions better.
Finally, let’s return to the question of spending too much time looking at charts. Forex trading is both physically and mentally demanding – so you need to be in top condition to be successful. Spending all of your time in front of a screen downing energy drinks isn’t going to help your cause. Instead, make a regular workout part of your routine – and make sure that you don’t forget your brain. For example, read books that expand your mind and keep the gears engaged. This doesn’t have to be books on trading – anything that engages and challenges you is going to have a positive effect.Get the 5 most predictable currency pairs