There is no denying that forex trading is an exciting business, it gives you the ability to control a lot of funds with a relatively small investment up front, and potentially make good profits. The aim is to buy low and sell high and when you get it right, it is an extremely rewarding pursuit.
In the early stages of a novice traders’ career, you will frequently hear them say that they are on a mission to beat the markets, take control of an instrument and win big. They will stay awake for days trying to find the ‘Holy Grail’ of trading and perhaps expose themselves to leverage that is too high for their levels of expertise. These bad habits often come from traders getting over-excited from one successful trade and they lose their perspective and judgment. Another reason traders make mistakes is that they let their emotions take over if they have lost some trades. They then take more risks than usual to try and compensate for the losses.
Discipline is perhaps the number one skill a trader has to master in order to become successful. Traders who don’t understand the importance of discipline will often end up trading with fear or greed guiding their strategy. Fear will never allow traders to move forward, it may freeze their fingers and stop them from entering the markets altogether. Greed, on the other hand, may reap rewards, as traders push the boundaries for every pip they can get, however, this strategy can see them go from profit to loss in an instant.
Discipline, along with risk-management are the co-pilots of any effective trading strategy. Personal trading strategies are important because they are designed by the trader who will base them on their own lifestyle, trading profile, knowledge, and experience. However, the reality is that no matter how good a trader’s strategy and risk management practices are, not having the ability to stick to them will eventually result in poor results.
In order for a trader to move away from the title of a novice and slowly progress to that of a professional, they will need to master the discipline of having a strategy and sticking to it. A trader achieves momentum by following the strategy they mapped out for themselves. In other words, they need to implement their strategy regardless of whether they are in profit or loss, so taking a profit at a set level is just as important as limiting a loss.
In conclusion, professional and novice traders share a common goal – but it’s the execution of the goal that will set them apart. The professionals have discipline, honor their trading strategy, and have control over their emotions. Novices usually test the waters and burn their fingers before they see the merits of discipline. The earlier they learn that discipline and strategy are central to forex trading success, the sooner they will reap the long term benefits as a trader.
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