Coming up with a solid trading plan is just half the battle, as developing the discipline to stick to it is another challenge altogether. Quite too often, even with a solid trading plan, the failure to follow the rules can still result in multiple trading losses.
One of the biggest reasons why traders fail to stick to their plan is that it is incompatible with their trading style or personality. For instance, a trader who attempts to work with a trading strategy geared to catch short-term market moves with several scalp trades might wind up abandoning the plan if he is averse to volatility. A trader who makes use of a swing trading approach might not follow the system rules if he winds up feeling bored with holding positions open for too long.
Instead of simply copying another trader’s plan, try to come up with your own strategy and set of rules. It is important to have a plan that is tailor-fit to your preferences so that you can trust the system’s effectiveness and make a habit of following its rules.
Impatience is another factor that deters traders from sticking to their plan. Learn to accept that there will be instances that the market won’t behave as you predicted it would, thereby resulting in some losses based on your trade plan. However, a few losses shouldn’t be a reason for you to abandon your plan altogether. Instead, look at the market factors that may have affected the results and figure out if these warrant adjustments in your trade plan or if those were just one-off events.
Confidence may also be an issue that can make it difficult to stick to one’s trade plan. This can go both ways, as overconfidence can lead to greed and poor risk management while lack of confidence can lead to fear of losses and also the inability to practice proper risk management. To avoid this, focus on just one trade at a time and try to refrain from letting a winning or losing streak interfere with your decision-making.
Lack of focus might also weigh on discipline, especially if you have too many distractions interfering with your trading. Not only does this span other activities that may take up your attention, but it can also cover too much forex market information that can cloud your judgment. Traders can be prone to overthinking, and this may prevent them from taking valid trade setups from their plan.
Remind yourself that trading is a marathon and not a sprint. While there may be times that a single trade can make or break your account, you should be more focused on gaining consistent returns in the long run and this requires the discipline to stick to your trade plan.