Why You Need To Learn How To Become A Disciplined Forex Trader

By: James Woolley

Forex trading can produce big gains, particularly if you use leverage, but it is extremely difficult to do. Only a tiny fraction of people actually make money on a consistent basis. So if you are going to join these winning traders, then you need to be the best of the best, which means you need a profitable system and you need to be disciplined.

It's discipline that I want to talk about in this article because this is an extremely important part of trading, and yet many people simply do not give it enough attention. Indeed most of these people will usually end up losing money.

The fact is that if you are not disciplined then you are going to struggle to make money from forex trading, or indeed any form of investing or trading for that matter. A winning system is important but even if you have a solid system, you still need to stick to the rules of this system at all times and never let your emotions control your trading.

For many people the crucial test of discipline comes when your system produces a few losing trades in a row. In this situation the disciplined (and successful) trader will simply accept that losses are a part of the game and will continue to trade the system as normal because he/she knows that it produces profits in the long run.

The indisciplined trader, however, is more likely to start chasing losses and either change the system in some way or trade an entirely new system out of frustration. This is very often the undoing of many a trader. Most of the gains that had been slowly built up over time can quickly disappear just by becoming more aggressive and trying to recoup your losses.

Another common example of indiscipline is often displayed in traders new to forex trading. They will experiment with different systems, find a system that appears to be profitable and start trading. Then they will either not use proper stop loss targets or they will not use them at all. Similarly another trait is that will take profits as soon as they appear, rather than have the patience to hold on for further gains.

All of these signs of indiscipline will usually end in disaster because no matter how lucky you may be in the short term, in the long run the forex markets will always expose the indisciplined traders. Unfortunately they will usually end up taking all your money as a result.

So the point is that if you are serious about becoming a highly profitable forex trader, then you need to learn to become a disciplined trader. This is just as important as the actual system that you end up using.