Forex Trading: The Importance of Rules and Goals

In Forex Trading, improvisation is an absolute evil. Those who approach Forex Trading believing they can make a living without solid preparation and a well-defined strategy are destined to lose all their capital. Any attitude that resembles gambling is prohibited, or at least it should be. Forex Trading is about commitment, discipline, and dedication. In this context, two elements assume considerable importance: rules and goals. It can be said that through the former, the latter are pursued. Following the awareness of such importance, three particular indications must be respected.

Keep a trading diary

Why keep a trading diary? In reality, there are at least three valid reasons to do so. It allows you to learn from your mistakes. Learning from your mistakes is the most effective way to improve. This applies in life as well as in online trading. However, to learn from your mistakes, you need to have a precise awareness of them. Hence the need to keep a diary. If you take note of everything you do, once you reach defeat, you can retrace your steps and understand where you went wrong. The diary is therefore an invaluable resource, a real growth tool. It allows you to develop an overall view. Keeping a trading diary, even just for the fact of writing in the first person what you have done day after day, promotes the formation of an overall view. It allows, in a nutshell, to have an awareness of the path you have taken up to that point. And, this is a fact, a view from above is often more useful than a close-up view. It exercises discipline. The trading diary, like any other type of diary, has the past as its main topic. On the other hand, the inverse dynamic is also obvious: if you record your actions, and these actions follow a well-established roadmap, it will come naturally to follow it in the future. It's like making a path your own, which will then be easier to repeat day after day.

Never set growth goals

This is a mistake that many make. Traders, in general, have a clear idea of the need to set goals. Everyone, with few exceptions, sets targets. However, the nature that such goals must have is less clear. For example, they should not be growth goals, where growth goals are understood as those that outline expected results. A wrong goal is "to earn X pips per day". This is the simplest way to force your hand, and therefore expose yourself to too great risks, practically without even realizing it. So, what are the goals to prioritize? In the initial stages, respect your own trading plan. A good goal is to invest X every day, according to the Y method, after having received, processed, and verified the Z signals. Provided that X, Y, and Z are established beforehand. Then, once the career has taken off, you can think about more precise goals in terms of results. In any case, it is good to keep one fact in mind: in the first months, or even the first year, there is a high probability that the vast majority of trades will be lost. Don't despair, the results, if you proceed with prudence and discipline, will come.

Control your reactions to defeats

This indication concerns the issue of rules. In fact, rules are not only represented by technical indications, but also by attitudes of a psychological nature, habits that are better to adopt quickly. From this point of view, reactions to defeat assume a capital importance. Well, the advice is to subtract this important element from the emotional sphere, even if, there is no doubt about it, it is really difficult. It is an arduous task to keep one's emotions in check, to control them, to impose a protocol of actions on them. Yet this is exactly what must be done, especially at the beginning of one's experience as a trader: contain one's reactions in case of defeat. When you lose, in Forex Trading as in life, the temptation is to give in to the sense of revenge, if not even vengeance. You would like to recover as soon as possible. This attitude is wrong. It inevitably leads to forcing, to taking risks that are not very sustainable. Therefore... To other defeats. After all, it is the classic attitude of those who, faced with a loss in the game, put more money on the table without thinking. So, if you have lost, what should you do? The answer is... Nothing. Or, to put it better, nothing different from what you would have done if you had won. You must follow your plan. Only if the defeats become serial can you think about making changes, as the trading system may be wrong. But this, obviously, is a different kettle of fish....