All traders have the potential to succeed at trading. But if that’s the case, what separates those that are successful from those that ultimately fail? The answer is by employing trading discipline.
Making money in the markets can be easy. However, the hard part is making money consistently.
While one trader may stray from their plan to pick a few profitable trades here and there, those same missteps are usually their biggest mistake. Trading ‘off-plan’ may seem harmless, but in the long run, without learning discipline, you will never make it as a successful trader.
Once losses begin to pile up, it can be very tempting to take more trades to redeem your losses. Likewise, once gains accumulate, it can be very tempting to take early exits.
I get it, I was just the same.
For the professional trader, they are able to stick to a set of predetermined rules. They realise that when followed correctly, their trading plan has a winning edge over the markets over a period of time.
Once I discovered this, my trading improved drastically.
But why does disciplined trading have such an influence on the overall success rate of a trader? Put simply; it removes emotion from the equation. By removing emotion, you are able to control greed and fear, and pay no attention to so-called ‘missed opportunities’.
The market has no mercy for greedy traders. Just remember that pigs get slaughtered; so be patient.
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And yet, so many struggle to resist the temptation of deviating from the rules to score a quick profit. Doing so is futile, as the trade that worked last time is almost guaranteed to let you down in a big way in the near future, burning through your trading pot and leaving you cursing the decision to stray from your trading plan.
The crazy thing is trading discipline is quite simple to instil, despite so many failing to do so.
Trading itself is easy, yet so many fail to trade with discipline. When you master trading discipline your profits will transform.
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In this post, I’m going to guide you through some tried and tested techniques to instil better trading discipline, leading to more consistent profits. They are all simple, but without them, you could spiral into a dark hole of losses fuelled by emotional decision-making.
Create a set of rigid, non-negotiable parameters to your trades
Pretty much all traders have some kind of trading plan that they follow. But for many, that plan and the rules are nowhere near tight enough.
If you don’t have a set of non-negotiable rules how will you be able to follow them?
The answer is you won’t. This is not new advice. But yet so many traders don’t have a list of unbreakable rules in front of them while they trade that tightly govern what you can, and cannot, undertake when trading. These include items such as:
- The type of asset you wish to trade
- The time of day you will make those trades
- Specific technical indicators that must be fulfilled to qualify as a potential trade
- Predetermined stop-loss amounts
- The number of consecutive losing trades after which you walk away
- Maximum daily loss value
- Maximum position size per trade
- Consulting a checklist before entering and exiting a position
Before I started trading using automated methods I was forever straying away from my trading plan. I had zero trading discipline. I would create a strategy that worked over time, yet I would deviate from it. Crazy, right?
Then one day, I decided to create a checklist for each of my trading strategies so I could physically tick off my trades and only when my checklist had been completed could I execute a trade.
Guess what? My trading discipline improved drastically.
Don’t get me wrong, having a checklist did not automatically mean that all my trades become winners. However, it made me stick to my trading plan and trade with more consistency, and avoid impulsive or reckless trades.
There’s no point in creating rules to govern your trading if you don’t stick to them religiously.
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That’s why I switched to automated trading. By coding my own trading strategies and having them trade automatically, I knew that my trading plan was being executed ‘to the tee’. There was no emotions playing a part. It’s just my plan and the markets.
Easy, right? Now comes the tricky part, sticking to them religiously.
Observe your trading rules as devoutly as a Monk
When the pressure is on, and you’ve got a mere matter of seconds to make a decision that will either end in a nice profit or an ugly loss, your trading rules will be there to guide you.
Plenty of traders fail in this regard.
They temporarily do away with their own trading rules that have been shown to have a winning edge over the markets and make a decision based on gut feeling instead of rationality.
So how can you develop your rules into your instinct?
An easy way is to write them down, and then place them within the eye line of where you trade. This is a strategy that served me well when I first started trading. I created a checklist (that you can download here), that I could physically tick off when trading.
Bonus: Download the free traders checklist that will help guide you in your trading to build your trading discipline, so you can finally be a successful trader.
I managed to refine my own set of trading parameters down to 5 fundamental rules which could not be broken for any reason.
Before entering any trade, I took an extra ten to fifteen seconds to look at my rules, checking each one off to make sure the trade was within my pre-set parameters. If it wasn’t, I didn’t trade. Simple.
Sometimes the best trade is no trade.
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Through the continued repetition of this practice, I was able to place trades within a matter of seconds. It’s at this point that your trading plan and your instinct begin to overlap.
That’s where you need to be in your trading.
I’m not going to lie, I found the whole process a tad tedious. I knew that the process had to be done but this was one aspect of trading I disliked, and is one of the main reasons why I switched over to automated trading.
The painstaking process of checking off my trades was removed and my trades could be executed as per my plan within a matter of milliseconds.
I get that automated trading isn’t for everyone. However, by initially starting out trading manually, I was able to build trading discipline which most definitely helps in all areas of trading regardless of your trading style. Whether it be manual or automatic.
But how do you build this sort of trading discipline with so many potential distractions? The answer is by starting simple.
Simple trades offer the best breeding ground for Trading Discipline
Those of you who read my posts, will know I am a big fan of keeping things simple.
When creating your trading plans, start to practise discipline with the most basic of parameters and rules, in the fewest markets.
Become a master of your own trading system before moving onto another. This way, you are able to make the same basic trades over and over again without deviating from your plan. While this will seem tiresome, it will build the habit of remaining disciplined.
Stick to what works. Do more of it less often.
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Even at this stage, some traders get tempted to stray from their predetermined parameters to scoop up some extra profit. But if they can’t remain disciplined at this early stage of their trading careers, how do you think they are going to cope in a few months time?
Only once you’ve built a simple set of parameters that are returning you consistent profits, should you begin to incorporate new parameters to try and improve your strategy.
However, just remember that there is no such thing as the perfect trading system.
Too many new traders search endlessly for the perfect trading system. Guess what? It doesn’t exist. Instead, search for a system that has an edge that you can follow with discipline long term. That’s the true perfect trading system.
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I know. I’ve spent years trying to find it.
Losing is normal in any profitable trading system and that a system which you can follow with discipline long term is the true perfect trading system.
Trading is a marathon, not a sprint.
Those who take the longest over the fundamentals often go on to be the most successful traders, since they allow sufficient time for those disciplined behaviours to become ingrained through repetition.
Build a disciplined life, NOT just a trading mindset
Some of the most successful people today all have one thing in common. Good habits.
How in shape or out of shape you are? A result of your habits. How healthy or unhealthy you are? A result of your habits. How much money you have? A result of your habits.
We are essentially a sum of our habits.
When you learn to transform your habits, you can transform not only your life but your trading.
When you learn to transform your habits, you can transform not only your life but your trading.
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The habits you build outside of trading ultimately forms the person you are, the things you believe, and the personality that you portray.
If you live a lifestyle where you don’t have a disciplined exercise routine or a diet, it will be difficult to be disciplined in your trading because you’re just not used to disciplined behavior.
Despite this, so many aspiring traders think that their life outside of trading does not influence their in-trade decision-making.
You cannot expect to be a disciplined trader if you lead an ill-disciplined life.
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Think about it; our behaviours are habitual. We are what we repeatedly do. But very few of us stop to reflect upon this fact, ploughing on regardless.
Transform your trading discipline today
Grab your FREE copy of the “Trading Plan Checklist” today and develop your trading discipline to improve your trading and increase your success as a trader.
Self-discipline is simply the ability to train yourself to abide rules or a code of behavior. It usually involves conditioning yourself to do something that you don’t want to do. Very few people are naturally good at trading. Being a good trader is usually doing the opposite of what all of your instincts want you to do.
Therefore, we need to train our mind and body to stay disciplined in all areas of life to achieve your goals, whatever they may be. Once you have mastered self-discipline outside of trading, you will soon see these being carried over.
My Daily Routine
When it comes to creating my daily routine, it was important to keep things as simple as possible. I have found that the longer the routine takes, the more likely I am to find reasons to avoid or skip certain tasks.
The main thing is to be consistent, and incorporate each routine one at a time, trialing each routine for 30 days.
Some of the routines that I follow in my day to day life are as follows:
Morning Routine
- Make my bed every morning
- Start every morning with a glass of warm lemon water, multivitamin and omega 3s.
- Set aside 15 minutes to plan my day using the Your Best Self’s SELF Journal.
- Exercise everyday. I go to the gym three times a week however, my goal is to be physically active for at least 15 minutes each day (even if it’s just going out for a walk)
Throughout the Day
- Drink at least 1.5 litres of water
- Read at least one page of a book each day
- Listen to at least one podcast
Evening Routine
- Meditate for 10 minutes each day before bedtime. If you are interested in meditation, I recommend starting with Headspace and their 10-minute guided meditations)
- Make sure the kitchen is clean and tidy before bedtime
- Set aside 5 minutes to complete my daily affirmations using the Your Best Self’s SELF Journal.
Take small steps to incorporate daily habits into your everyday routine that will improve your trading discipline and ultimately shape you as a profitable trader.
Study Disciplined Trading
When individuals first become interested in trading, the majority of them are drawn by the money. Yes, trading can be pretty lucrative, but what many of those newbie traders don’t understand is that some of the most top traders have achieved their levels of success through years of learning self-discipline.
With trading discipline comes profitability.
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The top traders are able to keep their emotions in check and in turn have the same emotional state whether they make a few thousands on a trade or when they lose a few thousands.
Win or lose; it doesn’t matter. Instead, it’s just another trade to record in their trading journal.
Many have termed this state of unbreakable discipline as “trading in the zone” as made famous by Mark Douglas in his book Trading in the Zone. This book in-particular together with The Essence of Trading Psychology In One Skill by Yvan Byeajee are seen as the holy grail for traders and are resources I thoroughly recommend for any trader wanting to improve their trading discipline.
Trading is all about psychology and learning to control your emotions with discipline.
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Each focus on bettering the detrimental mental attitudes that prevent traders from consistently turning a profit. They have helped me to hone my mentality, becoming a more effective trader in the process.
As I’ve mentioned, discipline is not a natural quality. It takes work, study, and continued practice before you start to see a change in your mindset. By becoming a scholar of discipline, you can reduce the learning curve process, making the shift from ill-disciplined to disciplined trading in a much shorter period.
Final thoughts on Trading Discipline
If you have been struggling with your discipline, then hopefully this article can help you get back on track or even just improve your trading discipline.
For me, this quality can really make or break a trader. You cannot ignore it, and once mastered, you will begin to notice a big difference in the consistency of your results.
To Recap
Trading is all about emotions. Yes, trading itself is easy, however so many fail to make it as traders. But why? They are unable to control their emotions.
When you learn to control your emotions and trade with discipline, you will see your profits improve. To recap, here are my tried and tested techniques to improve your self-discipline:
- Create a set of rigid, non-negotiable parameters to your trades
- Have a trading checklist that you have to physically check of before each trade
- Start trading with a simple trading system as these offer the best breeding ground for trading discipline
- Build a disciplined life outside of trading with the use of good habits
- Start journaling with the Your Best Self’s SELF Journal
- Further enhance your discipline and read Trading in the Zone by Mark Douglas and The Essence of Trading Psychology In One Skill by Yvan Byeajee
Don’t be afraid to go back to the drawing board if necessary. Some of the most simple trades with simple parameters will make you money if you are disciplined enough to trade them. And only when you have such a solid foundation in place should you enhance your strategy.
Are there any ideas for improving trading discipline that I’ve missed? What methods have helped you to become more disciplined in your trading? Let me know by leaving me your story in the comments below.
Happy trading
Samuel
Transform your trading discipline today
Grab your FREE copy of the “Trading Plan Checklist” today and develop your trading discipline to improve your trading and increase your success as a trader.
2 comments
Thank you for the article. After downloading the Trading Checklist, I felt more confident in my trades and I instantly saw my trades improve.
Keep up the great work. I look forward to reading more of your stuff.
Thank you for your comment. I am glad this post has helped your self-discipline and improve your trading results 🙂 Enjoy the Trading Checklist!