good performance boils down to discipline
by In2ition Trading Group
We believe the results of good performance boils down to the disciplined trading approach adopted by traders. In trading money should be subjected to the guiding principles as follow:
1. Good Money Management
We believe that 20% of success is attributed to the trading system while the other 80% is a result of money management and psychology.
The importance of money management is grossly underestimated by traders everywhere. It is almost like people are missing the whole point of trading. Too much time is devoted to finding the perfect trading system, but any trading system without money management and psychology is doomed to failure, even the best ones.
Every trader has to incorporate money management into their trading system(s) with the objective of controlling risks.
Always decide how much you can lose before placing an order – and stick to it!
Without this rule, as soon as the market has gone through your stop loss price, you will no longer act rationally. Instead you are most likely to make a decision based on Fear, Greed and Hope.
2. Not OverTrading
No trader wins all the time. Traders know the feeling of losing a trade and wanting to get back into the market as soon as possible only to lose again and have it happen again and again. Overtrading is addictive and can destroy a trader if it gets out of hand. Too many open trades with accumulated risks is a good example of overtrading.
3. Cutting Losses Short and Letting Profits Run
A major mistake from traders is taking small profits and letting losses run on and on.
Have a Trading Plan! And one of the integral parts of your trading plan is to let your profits run.
This is one of the main reasons why traders lose in trading: As soon as there are any profits in their trades, the traders could not resist not taking them, although this may not seem like a bad thing to do. However, if you are risking 100 pips and taking profit at 20 pips, you would have to maintain a huge win % to stay ahead in the long run.
To put things in perspective, if you risk 50 pips to get 25 pips, you need to have a 66% winning rate just to breakeven!
Now if you risk 50 pips to get 150, you only need to have a winning rate of 25% to breakeven.
Don’t you think that would be easier? Can you see how important this can be to your success?
This article was provided by In2ition Trading Group. Established, by a team of Professional Forex Traders, to meet a demand from investors to achieve moderate but consistent returns on their capital, but without the risk and volatility seen in recent times of more traditional asset classes such as equities, bonds, commodities and real estate.
Through our Automated Forex Trading Signals and Forex Managed Accounts, we allow retail investors access to trading systems normally used by Hedge Funds, Institutional Clients and High Net Worth investors.
Independent public reviews for In2ition Trading Group can be found here.