What it Takes to be a Disciplined Trader

Discipline is a characteristic that most of successful people has not only the Forex Trading industry but also in all areas or fields like sports, business, military and the likes. Let me put it this way, people who are most disciplined are the ones who make it to the top whatever field they are in. In sports like boxing, a boxer needs to stick into a very regimented routine, diet and avoid lots of things that may hamper his physical condition. That is the thing that is difficult for most people. When we see the Pareto Principle, that 10% of the people creates/possess the 90% of the wealth, there is no rocket science with that, it's merely discipline in setting goals, building cashflows, discipline of continuous learning, and in expenses. The fact is, all of these successful people in their niche are by-products of their discipline. Most authors write down their discipline in a book and made millions. Bloggers write their discipline in blogs and create markets.

Discipline, for me, is an act of self-control. They are synonymous. If you are a person with self-discipline, it also means that you have self-control. Controlling oneself can be very difficult since we are a creature of habit. As what Brian Tracey, an author of the book "A Million Dollar Habit" said: "we are just a habit away from our success". The reason why most of us have difficulties in controlling ourselves is mostly lack of motivation to do so. We tend to procrastinate things, we don't follow simple plans or goals. How many people tried to commit to a new year's resolution and end up failure? If we are really committed to succeed in our life, we need to realize that we have NO CHOICE but to be self-disciplined. It's a "take it or leave it deal". If you have no discipline in your expenses then tendency is you overspend, buying things you really do not need. If you are a businessman and you have no discipline with money, you will end up with financial mismanagement that may destroy your business' cashflow and the business as a whole.

Discipline - The Only Way to make Money in the Forex Markets

Forex trading is not exempted from one of the many industries that require discipline. In fact, not having discipline is a "kiss-of-death" in the currency markets- it's deadly and it's a shortcut to being doomed. How to acquire discipline? Well for me, it comes from an "inner" spirit or shall I call a "calling"; or "self-realization". It also comes from education. If you want something so bad and you started as a failure, then you try to study successful people and you found out that discipline makes them what they are, then you have no choice but to be one - a discipline trader!

So here are the steps that will empower you to be a disciplined trader:

1. Develop a burning desire to succeed and realize that discipline is your only bridge to achieve that.

2. Develop a daily Habit that will make things easy for you to do.

3. Record everything in JOURNAL for you to monitor your progress.

4. Reward yourself whenever you succeed in your short term goals or sticking to a routine.

5. Follow through.

One of my favorite books is entitled "The Disciplined Trader" by Mark Douglas. This book talks more about Psychology of Trading and that your mental discipline will manifest your external result. Mark Douglas was an expert in Trading Psychology and admonished in his teachings that the reason why most people dont succeed in the markets is because they have a wrong perception in the markets, and the lack of discipline to implement a consistent system to choose high probability trades.

It trading, here are some strict implementations of discipline:

1. Trading with your EDGE - As Forex trading is a game of probability, discipline is needed in choosing or trading only the "High Probability Trades" - may it be a pattern or price action. In my trading strategy I NEVER trade if I have at least 3 "confluences" that agrees together with my trading plan. What it means is that, if only one is present, I NEVER trade. Let me give you an example of a trade set-up that I prefer to trade:

This one is a HIGH PROBABILITY set-up that I took since it agreed in my 3-Points confluence. It is TRENDING, which is very visible in the daily chart; it is also PULLING-BACK at a KEY LEVEL (intersecting the Diagonal line and Horizontal); and it forms a PIN-BAR at the resistance level. Another thing is, the next support level is wide enough that I can set a reward (profit) twice my risked amount.

You need to wait for your edge to appear. Never rush in the markets. That is the difference between RISK and RISKY. There is risk in the markets but rushing is risky. Trading without an edge is risky.

2. RISK-REWARD - This part is critical in money-management discipline. So the thing is, in order to preserve your capital from streaks of losses, you need to follow a strict risk-reward ratio which is, in my case, it is at least 2:1 ratio. Meaning, I never enter into a trade if the set-up cannot provide me at least twice or more than my risked amount. If your risk amount is $50 then your reward must be $100 or more. With this plan, you can have a positive equity curve even though you have 50% loses in your series of trades.

3. DISCIPLINE to DOCUMENT YOUR TRADES - So since we treat Forex Trading as a business, we need to have an inventory. So first is we need to sort out on a daily basis potential set-ups in our favorite markets,in my case, my favorite markets are: EURUSD, AUDUSD, NZDUSD and GOLD. That's it. I stick into my favorite markets and I do not even try to bother looking at other markets. That is because I need to develop mastery in a specific market - which is one of the components of success.

4. STICK TO THE RIGHT MINDSET- It is very important to stick into the right mindset of being a trader. Right mindset is a Great Wall to protect you from being emotional trades, and protect your from being hurt everytime you encounter loses. With that it is to important to stick into these 5 Fundamental Truths as taught by Mark Douglas in his book "Trading in the Zone":

• ANYTHING CAN HAPPEN IN A TRADE.

• You Don’t need to Know what is going to happen next in order to make Money in the Markets

• Wins and Losses are randomly distributed in a Series of Trades.

• An EDGE is nothing more than an Indication of a Higher Probability of one thing happening over another.

• Every Moment in the Market is Unique

CONCLUSION:

Forex Trading may look simple as it seems but it is considered as a very tough industry. Professional Traders are consistently profitable not because they know how to trade but they developed an "alpha" discipline level. They trade based on a system that is protected by discipline - discipline of making a routine, following a trade plan, sticking into an EDGE and a Risk-Reward Plan and maintaining their right mindset in the markets.

Have a great trading journey!