Success in trading is not only about the knowledge and understanding of the fundamentals or technical analysis but the trading psychology plays a vital role in the success or failure of our trading. Whatever are our psychological traits we all, at times, make some common mistakes. A strict control to avoid these to repeat is what the trading discipline is all about. Bringing discipline in our trading career is the most important aspect and the foundation stone for the success.
Currency trading is a speculative investment that involves taking calculated financial risk in an effort to realize a profit. You cannot succeed by trading based instinct or gut feeling. Currency trading requires commitment, time and effort. A successful currency trader does extensive research and knows the market thoroughly. Experienced currency traders emphasize the importance of emotional and financial self-discipline.
To be successful you have to trade with rules and trade with the same rules consistently. You should know before you enter the trade where to buy – sell – place your stop and your targets including where to cover the trade in case it turns pear shape afterwards. Success requires systematic work with understanding. You need a system that will put the discipline above your emotions. That is exactly how your trading strategy should be like.
Discipline is the ability to be patient - to sit on your hands until your system triggers an action point. Sometimes, the price action won't reach your anticipated price point. At this time, you must have the discipline to believe in your system and not to second-guess it. Discipline is also the ability to pull the trigger when your system indicates to do so. This is especially true for stop losses.
The good news is that discipline is like a muscle. If you train it, your “reservoir” of will power will increase. How to do this? First determine your own limitations by consciously observing yourself in the above or similar situations. It would be great if you could do it while it’s happening, but if you don’t manage that at first, then keeping a log of your trades and what led you to make them will be enough. Naming the mistake and attaching it to a losing trade will also make it easier to increase your future awareness.