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Forex Trading: Important Rules 2

Discipline and Consistency

If you would like the full potential of your forex trading systems to be realized, it is very important that you take every trading entry, alter every stop, and close out every trade when your pre-defined trading system says you should.

This means that you will need an extreme amount of confidence in your trading systems, good and reliable technology, and some constant discipline to stick to your trading plan every day.

The advantage about being consistent and disciplined is that you will have a pre-defined plan for every situation that you might encounter in your trading, this will help you define what being consistent really means. If it is going to be successful, your plan will need to include at least the following items:

• All of the trading rules for you to enter, add to, and get out of your positions.

• What you plan to do if your computer for trading, internet connection, broker, power, telephone etc. fail to be of any real use or if they break down.

• What action you will take if for some reason you are unable to trade.

• What action you will take if you lose a certain percentage of your account.

• What action you will take if all the markets are closed and you can’t exit your current positions.

You cannot be properly consistent and disciplined in your approach to trading, unless you write down the answers to all of these possible worst case scenarios. And, if you ever lose money you will not know if the reason is because you didn’t follow your plan, if your plan is not complete, if your systems don’t work, or if you are just going through a losing streak.

Letting your profits run
This rule seems superfluous but is truly the key to being a successful trader. It is easier said than done, but part of your success lies therein. When a forex trade is profitable to you it is a normal fear afterwards of losing the unrealized cash starts, and usually, you truly want to close it out now and quit whilst you are ahead.

Actually, nearly all forex trading consists in long periods of small winners and losers, which are quickly followed by a few big winners which will usually make the difference between trading which is overall profitable and simply breaking even or even sometimes losing due to trading costs (commissions, spread, and slippage).

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