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Sunday, March 6, 2011

Discipline is key

No matter how many times you read that, your mind will always play tricks on you. I recently received an email from the GPS Forex robot team, which I am using as part of my Forex arsenal. This email was talking about the success of the robot during his first months...

Which is true, because I had it on paper money right from the beginning. The robot made 65 winning trades and 2 losing trades, and increased the capital by 60% in 3 months. Simply put, SPECTACULAR.

Now the most interesting thing on the email was not the results of the robot. But the fact that 2 clients blew up their accounts! Now you say? How come? How on earth is that possible with 65 - 2 and a 60% up using default settings?

Simple. The kids became too confident! And that's a big mistake. They saw the robot barely lost at all and decided to abruptly increase the size of the bets. Well, chance it was the moment right before the robot was about to make a losing trade and bum,....bye bye trading capital!

Maybe many more clients did what these two did but had a little more luck and they just did it another day when the robot was not due for a loss.

In any case, the lesson is: You can have the best! absolutely best trading system on earth and still screw up. DISCIPLINE is key in trading. Without DISCIPLINE you have nothing! Respect position sizing, money management, and be patient. Stop chasing the home run all the time. The home run is good for history and trading literature, but it makes you excessively undisciplined.

Happy trading week.

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