Discipline in Everyday Life and in your Trading
The winning trader is the disciplined trader. Disciplined traders devise very detailed trading plans. And they use them. They don't prematurely abandon trading plans. Once a trade is executed, the disciplined trader patiently waits to see the outcome.
The more you trade with discipline, the more profitably you will trade. How disciplined are you? If you have a problem with discipline, it is worth building up this skill.
Some people are highly disciplined and very self-controlled. Others are more impulsive. Extremely disciplined people scrupulously follow rules. They are careful to control their impulses, and may even have trouble letting lose. You know the type. They pay off their credit card bills every month, and are never late for an appointment. They carefully plan every detail of their lives. Although these characteristics may be ideal for trading, there's a downside: Overly disciplined people tend to have trouble taking risks. They prefer a sure thing, but trading outcomes are rarely sure things. People who are overly disciplined don't make the best traders because they crave certainty, a kind of certainty that just doesn't exist when trading the markets in the short term.
Winning traders are the kind of people who tend to prefer living a little on the wild side. They may not recklessly seek out risk, but they don't mind it. Relatively speaking, they tend to lack discipline and self-control. Perhaps that's why so many trading books and coaches find it necessary to remind novice traders to practice discipline and self-control. How is your discipline and self-control? Do you have trouble sticking to your trading plan? Do you long for more discipline and self-control when it comes to your trading? If you have trouble with discipline, you may want to try a stimulating exercise to increase your awareness: Observe your level of self-control in your everyday life and try to gain more control. How much discipline and self-control do you practice in your everyday life? Are you late for appointments? Do you spend more money each month than your budget allows? Do you frequently find yourself breaking promises? It's not necessarily the case that a disciplined trader is disciplined in all aspects of his or her life, but it helps. The life strategies we use in everyday life may bleed over into our trading life. If you often overspend, overeat, or have an unrestrained need for pleasure, you may find maintaining self-control and discipline while trading a little more difficult than others. So try this exercise: spend a few weeks trying to control as much of your life as possible. Pick specific areas where you can gain more self-control. Control your caloric intake, the money you spend, and time spent in leisure activities. See how well you do. It may change your reference point. You may soon discover that you rarely control your impulses, and can do much better. And this in turn may positively influence your ability to stick with your trading plan. It's worth trying. Discipline is the key to trading success. The disciplined trader is the winning trader. It's a skill worth honing.
Discipline is the soul of an army. It makes small numbers formidable; procures success to the weak, and esteem to all.
- George Washington –
Reproduced from www.tradertom.co.uk