Winning Trades or Lucky Trades?

It is not all about winning or losing the trade, it is all about having a trading plan before trading. Many traders assume that “winning trades” is the only thing that matters, but what they soon find out is that profiting over the long run is what really matters. Trading is all about discipline, and, trading a well developed trading plan. Yes, you will be lucky at times with some winning trades that come by chance, but remember, you will also lose the game of chance over the long haul. Let me say this again; Trading is all about discipline, and, trading a well developed game plan.

While trading you need to have the ability to recognize the difference between winning trades that were planned, and, winning trades that were luck based. A planned winning trade is when you make a very detailed trading decision based on a trading plan and then having the discipline to follow the plan. A lucky winning trade occurs when you do not stay with your trading plan and your discipline is just not there, however, you become profitable anyway. The trade resulted in a profit but it occurred by luck. You need to recognize that winning this way was only luck and this does not reinforce trading with discipline.

Let’s do a “what if” so you can understand what we are talking about here. Let’s say you buy the GBP/USD expecting it to go up 30 pips but instead the trade goes against you. If you followed your game plan, you would have used a stop loss which executed and closed you out minus 20 pips. But no, not you, instead of having the discipline to follow your game plan you used no stop loss and you held out and hoped, even prayed that the trade would come back around. Of course in this example the trade does turn around and in the end you end up profiting. You have ended up with a profit, but you were lucky that this trade turned around – this was an impulsive style trade as you did not have the discipline to follow your game plan.

So you say to yourself that "All well that ends well". Well, I am here to tell you NOT!!! At times, you may make a profit, even a big profit, however, at what cost? Your unplanned wins may provide you with some short term pleasure, but they influence your discipline over the long term as you need to understand that the win was not planned. Instead of learning and executing a well defined trading plan, following it to the “T”, and becoming profitable by implementing it, you place a trade haphazardly and it is luckily profitable. So, not having discipline is rewarded, and this, because of your profit, unconsciously justifies you to think that it is ok to lose sight of your trading plan, to lose discipline in the future because once upon a time you were rewarded for doing so. The profitable outcomes are usually few and far between, and a lack of discipline will ultimately produce trading losses which will ruin your trading account.

Managing your discipline, to build your discipline is crucial for steady and profitable trading. You implement known profitable trading strategies, you do this over and over again, and in doing so, your long term results are stellar. You have a trading plan that places the law of probabilities on your side. You then place discipline in your trading plan and KAZAM – you are a successful trader.

REMEMBER – A winning trader is the individual who develops the skill to make winning trades consistently over time. You are here for the long term – trade like it. Consistency is the key. If you follow a specific trading plan on each and every single trade, you will be allowing the law of probabilities to work in your favor, so for the long term you will be profitable – and isn’t that what it is all about? If you work your trading plan only “sometimes”, and at other times you throw caution to the wind, you ruin your probabilities. Let’s say you traded a strategy that had a winning track record of 60%. If you don't use the trading strategy the same way each time, you are decreasing your winning odds. And of course, fewer winning trades may mean an overall loss.

Discipline is extremely important.

With discipline comes your profitability. Follow your trading plan, and understand that if you follow your plan, you will end up with profits in the long run. If you let go of your trading plan, and acquire winning trades, you may feel on top of the world short term, but you'll pay a long term price when it comes to your ability to maintain discipline.

Become crystal clear on your trades, and always stay focused on your trading plan.

(Source: Article titled :Pigs Make Money, Hogs Get Slaughtered
posted by learningfx, at forexfactory forum)