After a forex trader has gone to the trouble of working out a viable and potentially profitable trading plan, why would that trader go against their own rules? While some people hold that rules are meant to be broken, in a trading situation, this may result in dire consequences.
Basically, having and implementing a trading plan makes up the trader's method for minimizing emotional reactions while trading. Having a set of rules which are of a purely technical nature, is the ideal method for approaching forex trading in an objective manner.
The Need for Discipline
If you plan on using a fully automated forex trading system as your primary means of disciplining yourself when trading, you may be able to completely ignore your emotions when trading without much problem.
Nevertheless, for the majority of forex traders who prefer to pull their own trade triggers, it is generally much more desirable to maintain control over their emotions and manage them in a disciplined manner that is conducive to making consistent profits.
Basically, having a good trading plan is often not enough for trading success, since having the discipline to follow the plan is necessary to make any trade plan work in practice.
Avoid Letting Emotions Take Precedence Over Your Trading Plan
Losing discipline in a trading situation takes place every day in the market, and any of a number of causes and excuses are used by traders to justify their mistakes. Unfortunately, more often than not, a trader that loses discipline will eventually lose money as well.
That is, unless they are extremely lucky, of course. Still, the fact remains that they are just not playing the odds when it comes to their forex trading activities.
Having a solid trading plan and the discipline to follow it can minimize losers while maximizing winners. Because of the variety of situations which can arise in the course of trading, a trader is well advised to include every possible trading scenario that can occur in their trading plan.
In essence, the main problem facing traders consists of the fact that many people that trade get caught up in the emotional roller coaster that trading can be if not approached in an objective manner.
Such traders often start listening to their emotions and ignoring their own trading plan. The resulting eventual loss of discipline can be the downfall of even a seasoned trader.
Be a Trader, Not a Gambler
At a certain point, the trader who has lost all discipline acts in a way remarkably reminiscent of a gambler, since they have virtually stopped being a business person when it comes to their trading.
Such a gambler might get favored with a long string of winners, only to gamble away all of their winnings and more before leaving the table. Of course, they had ample opportunity to walk away with a profit, but they did not have the discipline to do so.
In essence, any forex trader that wants to be in the business over the long term needs to think of their trading activities more as a business, than as a gambling game.
Certainly, trading forex involves taking risk, but trading forex with a well thought out and tested trading plan usually helps you come out ahead of the game on a more consistent basis.