This article looks at the FX trading rule of no excuses and what this means for you.
When you trade on the FX market you need to ensure that you do not make excuses for what is happening. When you make excuses for bad trades or other losses on the market you are not going to be learning from your mistakes. It is important that you understand how to implement your no excuses rule and what this means for your trading. You should also consider how you can rationally determine what is your fault on the market and what is not.
Having a No Excuses Rule
When you set up the trading plan that you need you have to consider having a no excuses rule. This rule will help you learn from any mistakes that you make on the market. It is important that you have this rule because there are many traders who have lost everything by not accepting that they did something wrong.
The no excuses rule will cover the losses that you make on the market and any diversions that you take from your trading strategy. When you place the blame for this on the market or the strategy and the tools you are using you will not hold yourself accountable for the mistakes that you are making. If you do not hold yourself accountable then you are going to repeat the mistakes and never be able to be completely profitable on the market.
Rationally Determining Who is to Blame for FX Losses
In order to correctly implement your no excuses rule you will need to be able to determine who is at fault and why a loss was made. The first place to look will be the trading journal that you should be keeping. The trading journal will cover all aspects of your trades from the analysis you complete to the profits or losses that you have made.
You should regularly review the trading that you have done. The frequency of the review will vary depending on the type of trading that you are doing. The more short-term the trading the more often you should be reviewing your trading.
When you review your trading you need to look at the losing trades that you have. You should also look at the trades where you have made a monetary profit, but have not stuck to your trading strategy. These are the trades where you are most likely to have made a mistake when you trade. You need to be open to the fact that you could be to blame for your loss.
If you have made a loss through a diversion in your trading strategy you need to consider why you did not stick to the strategy. If this is something that regularly occurs you need to determine whether or not the strategy you are using is correct for your trading style.
If you have made a loss through a turn in the market you should not assign it to an unexpected loss. There are many traders who place any loss they make unto the category of unexpected turn in the market. Before you do this you need to verify that the movement on the market was unexpected. If it was not then you have to accept that you did something wrong.