Many times we loose the plot in chase for the trading profits. Here, discipline plays a very important role especially if you are not a full time trader or investor. If your day is full of to-do lists then ongoing distractions can make trading challenging. Whether you are an active day trader or a part time swing trader it can be very difficult to stay focused on the charts. From the time I get out of bed in the morning to the time I call it quits for the day, I am trying to juggle things like phones ringing, lunch meetings, and answering emails.
Its always good to review your trading rules periodically to make sure you are ready for the stretch run of 2019. I have outlined a few steps that can make your task easier and enable you to trade in a more consistent manner.
Step 1– Have a trading plan in place. Trading plan is always nice to have but when it comes to adhering to one we are always at sea. The wavering mind always veers you away from following a structured process. However, if we need to maintain a consistent approach to trading where we are expecting a meaningful return from your market participation we need to have a trading plan.
Step 2– You should assume total responsibility for everything that is going to happen to you. You should be really looking it from all angles. Try to imagine extreme scenarios, as well. Like, if someone runs off with your money or a broker rips you off, assume that you were somehow involved in creating that situation. Although that sounds a bit too strong, you would be better prepared for negative things that might happen to you. When you do that and correct your role in what happens, you would have a better chance to stay in the game. Even more- if you stop committing the same mistakes over and over again, you have a great chance to be successful.
Step 3– Find your weaknesses and work on them. Once you find them- eliminate them. If it helps you, develop a diary and write all of your daily trades. Figure out what is going wrong and how you can improve by not repeating the same mistakes again.
Step 4– Analyze yourself on a daily basis. You are the most important asset in your trading business, so logically, you should spend most time trying to analyse your actions. Parts of the analysis should include analysing your feelings; also, major things that are going on in your life outside trading. The more you are aware of those issues (and write about them preferably in your diary), the less control they will have over your life and your trading as a result.
Step 5 – Daily Debriefing After every trading session you should be doing a daily debriefing. Ask yourself the question: Did I follow my rules? If your answer is yes, pat yourself on the back. If you lost money, but you still followed your rules, pat yourself on the back. It is better to lose money on some days following your rules than make money breaking them. The point here is to be consistent and consistency is reached through persistence and great discipline.
Step 6 –Learn to hit singles before swinging for the fences. Forget your unrealistic profit goals and just concentrate on taking a few bucks out of the market each day. Want to know a secret? This one piece of advice builds discipline and profits faster than attending a dozen trading seminars .
Step 7 – Read a good book or two. Start with The Disciplined Trader by Mark Douglas, and study it in detail. He’ll explain why you never wanted to make money in the markets in the first place. Then you can finally start to turn things around.
Trading is all about how you can make money whenever and however you participate.. Its all won and lost in the mind . Hence its is very crucial that we are able to reign in this wandering mind to reduce friction in trading or investing. Simply, self-discipline enables you to think first and act afterwards as said by Napoleon Hill. A disciplined mind is a sound mind and vice versa. The mind is disciplined because it has been subjected to sound principles and judgement over a period of time and so thinks differently from many others.