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Chapter 29, Part I. Trading Plan Framework – Common Thoughts. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 27, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    If you remember, right in the introduction to our school we’ve said that the bulk of traders loose money while just 5% get profit. I’m sure that those 5% do their homework and have a prefabricated trading plan before they even start to think about any trade.

    Pipruit: Ok, I’ve got it! Existence of a trading plan and strictly following it significantly increase your chances to reach consistent profits, although does not guarantee this, while absence of a trading plan makes it impossible.

    Still, I couldn’t keep from asking you… Although maybe I do not have a trading plan, as you understand it, nevertheless I make my own analysis. Still sometimes, I make a trade by gut feeling, that is not based on my analysis and very often it leads to profit. Is this allowable at all?

    Commander in Pips: The short answer is - no way.

    Here is a long answer also. You may feel some exciting and pleasure at the moment by the profit that you’ve made with this occasional trade – as you call it by gut feeling. But in a long-term perspective, if you’ve made one or two profitable occasional trades you may start to think, that having a trading plan is junk, since you’ve been rewarded by the market for not following it. So these gambling profits could play negative tricks with you and you will loss your ability to follow the trading plan and your diligence in discipline. Probably it won’t be such a problem if not for one feature of discipline. It’s very simple to abandon it, but very difficult to return. It’s like to roll the rock uphill – release it and it will roll back tp the mountain’s base. But try to move it back at top after that – it’s very difficult. The same is to keep up with discipline. To support it and follow it is much simpler than to abandon it and later try to return to it.

    If you start to think as “once I’ve got profit already, may be I should try again, I’ll take the chance” – this is a worrying sign. The words “chance” and “gambling” stand very close to each other, but we do not need dive into gambling. This approach will lead you to a short-term life on the market and long-term losses.

    So, you have to be focused on a justified approach that has a foundation, and this foundation is your trading plan. When you’ve planned the trade, executed it strictly what you’ve written in your trading plan and led your account to profit – that is correct approach. Besides the profit itself, you will be edified in discipline. That’s the first point. But why is discipline is so important?
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