The value of patience and discipline in Forex trading cannot be overstated. In order to be a successful trader, you must possess these two traits with unwavering consistency. As I have gone through various phases of learning, failure, and success over the past 17 months, I have had moments and weeks where I have been extremely patient and disciplined. However, maintaining that unwavering consistency has been one of the biggest challenges in my trading.
Lately, for a little over a month now, I have finally started to exhibit some reasonable level of self control. I realize I have not yet absolutely mastered these essential survival skills. Even during the past month, I experienced back to back days where I allowed myself to over-trade (the only two truly bad trading days I have experienced since mid-May). As such, I am constantly seeking new thoughts and inspirations for how and why to maintain steadfast patience and discipline. I believe I am starting to turn the corner. I find that I am no longer easy prey for the market. I now lie in wait and take quick small bites out of the market.
So, what has been working? What is helping me maintain my patience and discipline? I go through a routine before each trading session. The first thing I do is look at the lot ladder. I must warn you, without the right mindset, this can be a double-edged sword. The lot ladder allows you enter the number of pips you expect to average per day (along with some other variables) and then see how much money you will be making each week if you climb the lot ladder one rung at a time. The reason this is so dangerous is that you can make the mistake of raising your daily pip goal so that you can make huge money so much faster. This is completely counter-productive as it leads to over-trading, not covering profits, etc.
However, I have set my daily pip goal at the Fx365 Institute’s long-time suggestion of just 7 pips a day. Once you have been trading on the Smart Money Profile platform for some time, you know this is truly a modest goal. Before any trading session, I look at where this highly obtainable goal can take me. Here is a screen shot of what one part of my lot ladder looks like:
I take a few moments to really focus on the truth that averaging just 7 pips day turns a $1,000 account into a $20,000 a month income in a ridiculously short time frame. I mean, this is incredibly powerful stuff. It helps me cover smaller trades rather than trying to swing for the fences. I still need to get better at not caring if the trade runs another 30, 50, 100+ pips. It’s tough knowing that I could have made my whole week on one trade, or hearing that someone else pulled a 40 when I had better entry and only pulled a 10 or 20. However, I come back and look at the lot ladder again and realize I only need 2-4 of my modest winners a week. I have to always remember, trading is a long-term race. By taking those smaller positives, I avoid taking negatives that make it harder to reach my goal. Then, at the end of the week when I have made my goal and am moving up the lot ladder again, I am one week closer to the financial freedom that $20,000 a month brings. Isn’t that the whole idea?
My other monumental struggle has been to avoid over-trading after taking a negative. Now, although I am making significant progress towards trading at indifference, there are still times when I take a negative trade and literally feel the stress prickling through my body (what a horrible feeling). When this happens, I absolutely must exhibit tremendous discipline and STOP TRADING until I have calmed down. If I look at where I want to be by the end of 2015, I ABSOLUTELY CANNOT ALLOW MYSELF TO DAMAGE MY ACCOUNT.
At those crucial moments, I lean on something Fx365i’s Head Trader Wade Guth once told me. He asked if I was planning to trade tomorrow. I said yes. He asked if I was planning to trade next week. I said yes. Next month, next year, etc? Yes, yes, and yes. So he asked me, “Why on earth would you get worked up about one trade or one negative day?” I also reflect on Shane Guth recently telling me that the biggest thing he NEVER wants to do is let one bad day cause him to lose his buying power. Live to fight another day!
Over this past month, I have also started telling my wife how my trading went each and every day. She has believed in me and allowed me to stay on this journey despite several months without positive results. Believe me, it is not easy to tell her when I am down for the day. However, when I have taken a couple of wrong trades and walked away with relatively small losses, I can proudly tell her I kept my discipline and didn’t throw money out the window like an idiot. Knowing I will have to report to my wife on a daily basis helps me maintain steadfast discipline and patience in my trading.
One last thing I think about is basically a lesson from Rhonda Byrne’s famous book, The Secret.” The Secret teaches that if we want something, we have to hold it in our mind’s eye, believe we have already obtained it, and be fully grateful for having received it from the universe. So yes, I am thankful for my huge trading account. More importantly, I am thankful for being a highly successful trader with tremendous patience and discipline. I know I did not get to this point by getting emotional and overreacting at every unexpected twist and turn in the market. I am thankful for the self control and confidence that made me the trader I am today.
I realize the lot ladder may not help everyone. Of course everybody is not married or willing to discuss their daily results with their significant other. I also know that not everyone has the same view of The Secret as I do. That is not the point. What is important is that I have found ways (and will continue to seek and find new ways) to exhibit patience and discipline in my trading. If you are struggling with patience and/or discipline in your trading, maybe you can use one of my tools. Some of you will have to come up with something totally new that works for you. The key is to find something that truly resonates with you – something powerful enough to give you the internal fortitude to do the right thing in the face of strong negative emotion. Once you find ways to be patient and disciplined, you will be much more likely to survive in the unforgiving Forex jungle.
Two quick notes:
1) One other thing that has helped is writing this blog. Thank you so much to everyone who reads it and especially to those of you who reach out to discuss your own trading experiences with me. Thank you, thank you, thank you!
2) In regards to the 7 pips, you may be saying, “Well what about the commission?” On my personal spreadsheet, I subtract 1.5 pips from each trade to come up with what I call “net pips.” This number will vary depending on the pair you trade and whether you are in a micro account. I can help you figure out the exact number if you need help with this.
As always, please feel free to reach out to me at email@example.com. I LOVE hearing from fellow traders!
Smart Money Profile Trader