Many traders have an excellent trading strategy but still keep losing many trades unnecessarily. Trading discipline is critical to achieving your trading objectives.
Despite this undeniable fact, many traders still lack discipline in trading leading to huge losses and frustrations.
Adopting the following golden rules would significantly improve your trading performance in financial trading.
The Golden Rules in Trading Discipline
Discipline in trading involves having a clear set of workable rules and applying them effectively in your financial trading activities.
Put your greed and fear under control as they are the major deterrents in maintaining trading discipline.
1st rule: Trading Plan
Even in the iron trade, it is challenging to succeed without a trading plan, which is the foundation for profitable trading.
A trading plan consists of rules with specific details that guide the disciplined trader.
The basic information includes entry, exits, major markets, analysis, and risk management.
Plans in financial trading are specific to an individual, and no two plans are identical.
The disciplined trader has plans based on research and proven methods.
Having a plan for trading is good, but sticking to the plans is the key to your success in trading.
Always evaluate your plans and make changes wherever necessary or develop a new strategy.
Follow trading strategy involves disregarding your plans in a trade.
Before trading with real money, it is essential to test your plans on the free demo accounts, paper trading, or back testing on historical data.
Must Read: How to Create a Winning Forex Trading Plan
2nd rule: Financial Trading is a Business
In order to succeed in iron trade, take trading as a business enterprise but not as gambling, hobbies, or jobs.
Taking trading as a job can be frustrating because there is no regular income.
Adopting a gambling mentality in trading is very bad, as it is addictive while disregarding the trading plans.
Trading discipline demands constant market research and proper strategies to achieve your financial trading objectives.
3rd rule: Trade with Your Money
Never borrow money from friends, banks, or anywhere else to finance your financial trades.
Also, money budgeted for loan repayment, college fees, or mortgages should not be channelled towards financial trading.
4th rule: Stick and Believe in Your Trading Rules
The disciplined trader will advise you to stick to your rules and have trust in your trading abilities.
Why have the best trading strategy and then looking at other people’s strategies or even adopt a follow trading strategy?
Stay calm, and let your plans work for your success.
Have a proper trading discipline of following your rules but not breaking them.
Unfortunately, many people don’t like following rules.
It’s your responsibility to have a trading routine and religiously stick to your iron trade tricks.
The disciplined trader always refers to their plans, while losers always abandon their plans as greed and fear engulf them.
5th rule: Adopt New Technologies
Technology is continually changing, and it pays a lot to adopt new technologies.
For instance, smartphones allow you to trade anywhere at any time in real-time.
Visit charting platforms for new and variety of trends in market analysis.
Take advantage of technology to access market news quickly and reliably.
Also, the technology eliminates the stress of always watching the market by setting alerts and orders.
Most trading platforms automatically execute market orders such as entry, stop loss, and exits, leaving you free to concentrate on other activities.
6th rule: Protect Your Hard-Earned Money
Forex trading needs the patience to realize profits after a certain period that will have both loses and wins.
However, You can quickly lose your money in financial trading if you lack trading discipline.
To minimize losses, have a tolerance limit for every trade, even if it appears to be good.
The tolerance limit ensures that you can trade with money that you can afford to lose.
Most traders adopt a tolerance limit of between 1% to 5 %.
You can start with a lower limit and then gradually increase as you gain confidence and experience.
7th rule: Learn, Learn, and Learn more!
The forex market is highly volatile and dynamic.
The consistent trader Keeps abreast of current and past affairs that affect financial trading.
Knowledge and deeper understanding sharpen your trading skills while improving your trading confidence.
A Lot of information is cheaply and readily available over the internet that can help you learn about the iron trade tricks.
8th Rule: Use a Stop Loss
Discipline in trading entails the effective use of stop loss to minimise losses and protect profits while removing emotions in a trade.
Stop loss refers to the preset risk limit that you are willing to undertake in a trade.
The consistent trader utilizes stop loss to minimize losses in a losing trade effectively.
It also reduces your stress as you know beforehand what you are likely to lose in a particular trade.
Trading without a stop loss is a horrible strategy even if you luckily win in the trade.
Losing a trade with a stop loss is excellent as long as it adheres to your rules.
Related: What is the best Stop Loss Strategy in Forex
9th rule: Take a Break
After a series of sustained losses, it is logical to quit trading for a while.
This will give you a greater opportunity to evaluate yourself and your trading plans.
You could be having workable plans, but your inability to follow through with your plans is causing you undue stress.
Also, changes in the market might lead to losses.
Besides, your mindset and poor habits might interfere with your trading plans.
It is wiser and safer to continue trading after you have sorted the issues leading to your losses.
10th Rule: Focus on Your Plans
Focus on your strategies toward achieving your financial objectives.
Losses and wins are part of iron trade, but several profits will lead to a more significant gain over a long time.
Likewise, several losses quickly accumulate to massive losses.
Setting realistic objectives and expectations will assist you in staying focussed on financial trading.
It is very unrealistic only to expect wins daily.
Always accept a loss or win and move to the next trade as the consistent trader.
Conclusion
If you have good discipline in trading, you will have higher chances of winning while having a peaceful mind.
Trading discipline requires self-control and dedication.
Remember that every rule is essential, and all the rules collectively strengthen the consistent trader’s overall performance.
Above all, it is crucial to go through your rules every day before you engage in your trading activities.
Always remind yourself of the rules to instill the trading discipline within your system.
2 Responses
Highly informative
Thanks Kipkorir
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