Admiral Markets Group consists of the following firms:

Admiral Markets Pty Ltd

Regulated by the Australian Securities and Investments Commission (ASIC)
  • Leverage up to:
    1:500 for retail clients
  • Volatility protection
CONTINUE
Selecting one of these regulators will display the corresponding information across the entire website. If you would like to display information for a different regulator, please select it.
Selecting one of these regulators will display the corresponding information across the entire website. If you would like to display information for a different regulator, please select it.

Why Forex trading discipline is important

Forex market is a very attractive place for novice traders. Many of them join the retail Forex industry every day. However, many of those newcomers often fail to make it in Forex.

Why is this happening?

The reasons are numerous, but there probably two of the most important.

First, many newbies lack trading discipline and patience. Second, they cannot assess risk potential and apply their risk management.

Usually, traders believe that development of a Forex strategy is the most important thing to do and invest their efforts into it, forgetting about Forex trading discipline. While a good strategy is important, being able to actually carry it out is even more crucial for a trader.

In this article, we will describe the role of patience in successful Forex trading and how to practice it.

Rules of Forex trading discipline

Successful Forex trading requires a successful trading strategy, competence to amend it according to market movements, and, certainly, proper strategy execution. Such proper execution relies mostly on trading discipline, and most of investors believe that this is one of the core abilities of a successful Forex trader. The question is how to breed this discipline in your trading? There are three major rules that can guide you on how to understand and apply the Forex trading discipline.

Demo Account

Develop a plan

It can be said about any discipline that it involves not only following of certain rules, but also the development of this very set of rules. The first thing to start with when enhancing your trading discipline is a plan. You can use any methodology available for its creation, but the plan of your trading activities should follow the guidelines below:

  • Set your entry signals precisely
  • Define your exit signals clearly
  • Prescribe maximum amount of trades per day, per week, and per month
  • Set a list of trading instruments
  • Define you trading hours
  • Decide on maximum duration of your trade
  • Select minimum duration of your trade

Listing the rules you need to abide by helps you to improve your Forex discipline. In addition to trading guidelines, your analysing of the market should be also marked in the trading plan to see if it fits there.

As soon as you get to the practice of online Forex trading, make sure you follow the plan. All the items of the plan that you have set for yourself – trading frequency, entry and exit signals, trading instrument to use – must be now put into practice. Having the rules developed is not enough; you need to be able to follow them in order to become a successful Forex trader.

Abide by a stop-loss

It is difficult to overestimate the importance of this when learning how to become a disciplined Forex trader. In the process of trading knowing your exact stop-loss level is crucial. You have to set it before opening a position and never lower it during the trade. Certainly, if a trade does not look profitable at all, you can close it off before hitting your stop-loss level.

However, learn how to resist the temptation of lowering your stop-loss simply for the sake of keeping this position open.

Although this sounds simple, it's a crucial element of Forex trading. Seasoned investors know that the more you trade, the more you will have situations when you would hope that a losing position will turn into a profitable one. This happens because it is generally difficult for traders to accept failure and close a trade with a loss.

This is why you must set your stop-loss strictly – it facilitates the very moment of closing the position from psychological standpoint, as the closure is conducted automatically. As long as you might be emotional during a trade, especially a losing one, never allow yourself changing your stop-loss after opening the position.

You can, however, modify it when you sit down and analyse the market and your results with clear mind.

It is a bit different with take-profit levels. For beginners, it is recommended that a take-profit level is fixed for every trade.

Try not to modify it even if you think that the market will continue going in your direction. Take-profits can be amended when you become a more experienced trader, especially if you know by that time how to set your stop-loss to bring profits as well.

As a rule, regardless of your level of trading proficiency, it is advised to only commit to a trade if you have your profit target set.

Schedule your trading

Another foundation for developing Forex trading patience and discipline is a trading schedule. Decide on the best times for your Forex trading and stick to them. Train yourself not to trade outside of this set time period.

For instance, if your plan says you should trade along with London, start when London opens and end when it closes. There might be a temptation to continue trading after that, for you might think of some more investment opportunities ahead.

However, try and resist it, because other markets might behave differently due to economic and market peculiarities you are not aware of. This, of course, may lead to losses in your unplanned trade.

Then, decide on your trading limits. This means setting a certain number of trades that you allow yourself within a certain period of time and never exceed it. The time period should be considered according to your trading strategy. Thus, intraday traders limit themselves to a day, and medium-term investors think of this in terms of a weekly or a monthly period.

This practice is crucial for developing discipline in Forex trading, because at times when you lose money in your trades, you would most probably want to open new positions to compensate the loss.

By doing so, traders tend to focus on wrong things and take unnecessary risks, which undermines their risk management plans.

Start Trading

Patience in Forex trading

Patience is another important quality that every trader must strive to. It might seem similar to discipline, but they differ. When you trade FX online, sometimes you might be tempted to close winning trades too early in order to take the profit or prevent this trade from losses. This might also happen to you when a winning trade decreases it profit.

In general, trading itself is quite simple, but being patient might require some effort. Let's look at the ways of improving patience for your FX experience.

The first step to enhance patience is to take away the fear. After you have made a decision on certain trade, do not let anything make you doubt it. When, for instance, you just opened a EUR/USD short and there come several upward candles, do not hurry to close your trade.

On the other hand, if some surprising news is released, you might take a hint on when to close your position. For these purposes, you should keep in mind the exact levels of losses you might take and minimal profit you seek for each trade.

Other than these, market fluctuations should not affect your decision. If you stick to this practice, your Forex patience will definitely go up.

Then, assessment of your winning trades is another important step towards FX market patience. When an opened position is almost reaching the take-profit level, you might want to close it in order to grab your profit immediately.

Well, if you do so, you will, but with this you do not let your trade reach its full potential. This is also a loss – on further profit. In this case you might want to set your stop-loss to a minimal level of profit for this position and amend your take-profit to a level where the trendline will reach, on your opinion.

If needed, this can be fulfilled several times per trade. Although this is a violation of the above idea of a trading plan, such strategy is a good instrument for seasoned traders as it teaches how to be disciplined in Forex trading.

Summary

Now, after learning these fundamentals about how to become more patient and disciplined FX trader, go and try to implement them in practice. Do some market analysis first, and then create your trading plan for next week. For that you will need to select your trading instruments, decide on entry and exit signals, set the levels of stop-loss and take-profit, as well as the number of trades you intend to carry out at most.

For all of the above you would need a trading account. You can open a live account with Admiral Markets or start from paper trading by setting up a demo account. We believe you are ready to apply you knowledge now, so enjoy your trading!


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.