There’s a very important reminder that some traders use to neglect – “Don’t follow someone else’s trading advice blindly”. This piece of advice goes to all traders, not just in CFD Trading, who think that one successful trading strategy applies to all types of trades, no matter the type of trader you are. This is not true. Just because one trading strategy is successful to one trader doesn’t mean that you will obtain the same success and profit if you use it too.
As you already know, each trader has his own situation in life. They have different risk tolerance, market views, experiences, and thought processes. This is the very reason why you need to have your own, unique trading plan and slowly make some updates on it as you go along with the market. To be a disciplined trader, you need to have these two ingredients – create a trading plan and stick to it. But if you are aiming to become a great professional and profitable trader, you don’t just need a solid discipline. What you need is a rock-solid discipline.
The Rock Solid Discipline
You want to be a successful trader, therefore, you don’t need a discipline that’s made from straws and sticks. The main foundation of a successful professional trader is a rock-solid discipline in trading. With a trading plan on hand, you are guided on the things that need to be done, why, how, and when you should perform the action. A trading plan also contains the trader’s personal expectations, personality, trading system, and risk management rules that you need to follow strictly every time you open a trade. If you follow this trading plan, you will limit the mistakes you make when trading and also minimize the losses you incur in your account.
More importantly, with a trading plan, the trader gets to remove the bad decision during the heat of the moment. These decisions are mostly bought by emotions that consume you knowing that your money is at stake. Then, you unknowingly make irrational decisions. You only get to realize what you have done after suffering from a huge blow.
The best way to avoid such incidents is through minimizing the thinking and having a trading plan for every action you make in the financial market. Having the right trading plan helps you spell out every move you make. So, when you are put in the heat of the moment, you are not going to make decisions that you will regret in the end. When you create a trading plan, aside from following it, you must also stick to it no matter how tempted you are to make sudden changes.
What is the Difference between a Trading Plan and a Trading System?
A trading plan describes how a trader should enter or exit a trade while a trading system is part of the trading plan aside from other important parts like risk management, executions, and analysis. Because there are constant changes in the market conditions, you can have a backup CFD trading system in case the previous one flops.
