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Trading Discipline – 5 Things To Focus On Now

Trading discipline – the basic elements

This post is to remind us of the trading discipline basics and can be used as a quick checklist.  Forget about your preference for MACD versus RSI for 5 minutes and ask yourself if you are taking care of these vital areas.

  1. Respect your stop loss.  Have you moved a stop loss recently after entering a trade?  Stop losses should always take us out of the market when the trade signal has been invalidated. The fact is, each and every trade will go wherever the market wishes to go, irrespective of our expectations and desires. It is not unusual for ideal trade setups to be unsuccessful with no particular explanation. Traders should only ever be trading an edge and not be overly concerned with an individual trade.
  2. Get a trading plan together and make sure you adhere to it. What is your trade plan?  How do you deal with event risk, money management etc?  You might be in serious danger of blowing your forex trading account should you not fully understand this prior to taking the trade. Describe your trading strategy in advance and don’t veer from it.  See this post on writing a trading plan.
  3. Do not over leverage on a trade. Trading with too much risk can impair our judgment. Its much easier to kill a bad trade when its only a small position.  We run the risk of becoming married to a trade idea when too much money is at stake.
  4. Make sure your trading suits your lifestyle – not the lifestyle you were living a month ago.   Are you dabbling in the market when you don’t really have the time?  Successful traders specialize in a limited amount of setups and master them.  If you can fully master a modest amount of trading setups versus entering a trade when something resembling a trigger presents itself you may see your trading performance improve. 
  5. Focus on yourself; don’t just focus on your trading performance. Work on resolving bad habits and the benefits can spill over into your trading.  Make sure you get a good nights sleep. You might end up being surprised just how it will help the bottom line and benefit your trading account.

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