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7 steps to Increase Discipline and Master Your Trading Strategy

Discussion in 'Forex Discussions' started by painofhell, Jul 13, 2016.

  1. painofhell

    painofhell Content Contributor

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    In this article I will give you methods which will increase your trading discipline most of which are based on scientific discoveries which are unknown for most traders. This should enhance your ability to gain a trading edge over others competing in the same markets.

    1. Find a strategy and create a trading plan
    Many traders just use some indicators and price action formations and make random decisions based on that. But it doesn’t work and when you don’t have a plan then first you need to define how to trade. It is proven that you have some resources of energy which you use on making decisions. But there is little sense in using this energy every day on defining “how to trade”. You should use it only once (when you choose your strategy and create a trading plan) and save your energy on other important issues: analyzing setups, opening transactions, setting SL and managing your transactions. Unfortunately (or fortunately, because you can take advantage of it) most of traders waste their energy on defining how to trade and as a result often make poor decisions.

    It is also important to consider that when you don’t have a plan then you make decisions which are somehow random. Because of that you always make them in a different context and you don’t learn from your mistakes. For example, taking a pin bar in some situations is good but in others it is not. When you don’t have a plan then you aren’t focused on this kind of important detail which defines if you are a loser or a winner.

    2. Make it simple
    If you just start using a strategy or don’t make money on an existing one then don’t include too many indicators and formations. It will make it too complicated for you and it will be harder to learn from your mistakes and start making money which leads to danger. When you start trading, or don’t have a positive experience with your existing strategy, then it is very easy for you to give up. It is therefore better to see some progress in your results and increase your motivation. Hence at the beginning don’t include more than one indicator and formation in your strategy.

    3. Stick to your strategy
    When you have a strategy then try not to give it up after first big loss. Of course taking a loss is unpleasant but you must sometimes initially lose to make more money in the future.

    By changing your strategy too often you lose almost all of your experience gained by using your previous strategy. Hence if you just give up after the first big loss then you will never master your strategy.

    Of course it may be that your strategy is unprofitable but it is often too early to determine this after taking one (even big) loss.

    4. Divide your strategy up into small steps
    When you trade then you take different kinds of actions. You analyze markets, search for setups, open transactions and manage them. In fact each of these actions is a different step and you should think about each step separately.

    Usually traders think that they are disciplined if they follow all of these steps, however, it can lead to decreasing your motivation. When you start learning something new then there is a tendency to make a lot of mistakes but you also make some progress. When you expect from yourself to be absolutely perfect then it is easy to focus on your failures and not seeing any progress leads to being less motivated.

    It is also important to consider that when you think that you are disciplined only by following all steps from your strategy, then it is harder for you to spot your weak points. For example, imagine that you are good at analyzing charts and opening transactions but you wait too long with closing your losing transactions. Usually in this situation a trader will blame his or herself and think that he or she is an undisciplined loser. Blaming yourself or calling yourself a loser doesn’t give you anything and only decreases your motivation and self esteem. In fact in this situation you should be proud because you followed many important steps from your plan. Yes, you may have problems with closing your losing transactions but you should accept that, investigate yourself and find a reason of your failures.

    5. Plan what you want to do
    You have a plan and you should also know exactly what are you going to do in any given situation so it can’t be vague. You can’t say “If I see a setup then I will think if it is good or not”. You should define exactly what a good setup is, what is not a good setup and how to define if it is good or not. Otherwise you will lose your time and energy on defining (in stressful conditions) what you should do and probably make poor trading decisions.

    6. Monitor your progress
    I previously suggested that you should divide your strategy into small steps. In addition to this you should also monitor your progress in any of these steps on paper as it will be beneficial for you in two ways in that you will see improvements and motivate yourself to an even bigger effort. You will also see where you have problems and it will be useful information for you that you need to correct something.

    7. Reward your progress
    When you make any progress then you should reward yourself. Your progress doesn’t have to be big and could be enough if you have just opened your transaction when you should. It will make you proud of yourself and increase your motivation.

    Rewarding yourself produces endorphins, (the hormones of happiness). It is how your brain convinces you to do something and in some situations it works, but in others it doesn’t. For example your brain produces endorphins when you watch, but are not engaged, in something exciting which may not be good because it doesn’t motivate you to take action. This process can be manipulated and used when you do something which is good for you.

    How should you reward yourself? Well you may want to buy something but from my experience the best are inner rewards: just smile, applaud yourself or say “Good work”.
     
  2. Sharon Higgins

    Sharon Higgins New Member

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    These are excellent points and any newbie should highly consider it, I believe in a business like Forex, we got to keep our self discipline since that’s really how we are going to achieve success and able to make profits, if we’re discipline then we will put extra yard of benefit to our game, but if we keep that discipline then we will have difficult time managing thing. I always keep myself highly discipline and through a broker like OctaFX, it helps a lot with their mighty rebate program where I can gain 50% back on all trading orders which is even through the losing one too, so that’s why I like it so much and helps me a lot with performance.
     
  3. platinumtraderfx

    platinumtraderfx New Member

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    Guys which criterion are best for finding reliable broker? I want to hear opinions about Hotforex broker, anybody has experience with them?
     
  4. Mistalee

    Mistalee New Member

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    Nice article, Would be very much helpful for newbies to get over their emotions.
     
  5. Sharon Higgins

    Sharon Higgins New Member

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    I believe you got to have your own judgment because you should select broker that suits you and covers your strength, it’s pointless to go with broker who other suggest, but still the general requirement for all is to have broker that’s regulated and have reputation with clean image. I don’t know much about HF, so I won’t comment. I go with OctaFX broker since they are regulated plus a worldwide recognized company with winning over 14 awards including been the best ECN, Best International broker and much more, it also pays us instantly with zero commission, so I will suggest this to all if they really wish to go with reliable broker but again go with one you are comfortable with.
     
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