Trading Discipline: Tips and Techniques for Traders

building discipline trading tips Jan 04, 2024
Trading Discipline

Reading Time: 6 minutes

We all want more discipline in trading than we have. Trading discipline seems to be THE answer to all the pain we go through when trying to make trading work.

But discipline requires dealing with discomfort, which is something we all instinctively avoid. However, if you want to make money trading, you’ll have to learn to be okay with discomfort and functioning in a constantly changing and highly uncertain environment. And that will require at least a little discipline.

Why Trading Discipline Matters?

Because without trading discipline, luck is your only other option. Of course, luck is great when it happens, but it is a poor trading strategy.

And that's why trading discipline is a MUST if you are seriously considering becoming a trader for a living.

Techniques for Improving Your Trading Discipline.

So how can you improve your trading discipline? Here are several strategies that can help:


 1.  Overcoming Discomfort: A Key Step in Trading Discipline

Practice dealing with discomfort. 
Discipline is uncomfortable because you’re either doing something that you don’t want to do right now, like taking a loss or you’re avoiding doing something that you want to do right now, like chasing a stock that’s flying. Neither one is as enjoyable in the moment as following your impulses.

πŸ’‘ Try this: When you feel discomfort, notice where you feel it in your body. Describe it to yourself. What does it feel like? Confront the discomfort and continue objectively observing it until it goes away. It will go away! 

2. Ditching Excuses for Better Trading Discipline

Your trading discipline excuses must go away! The first step is to closely examine your excuses. What are the excuses you give yourself for staying in a losing trade for too long, entering a trade without a clear setup, trading without a plan, or revenge trading? How do you justify your lack of discipline?

 πŸ’‘ Try to answer these questions. Gather knowledge so that from now on your battle with excuses will be much easier. Understanding what's happening inside your head is the key!


3. Meaningful Goals Drive Trading Discipline!

A highly meaningful goal is much more motivating than one you feel lukewarm about. So choose your goal wisely! You’ll do more and endure more to achieve a goal that means a lot to you. Life is too short to spend your time on anything less than goals that are spectacular to you. 

 πŸ’‘ Ask yourself: “Why am I trading? Why is it important to me to make it work?” 



4. Practising Trading Discipline Daily 

Do it every day.
 Practice discipline every day. You can make yourself stare at the wall for 10 minutes. Make yourself take a break from your screen every hour and walk around your house. Challenge yourself not to take the trade when you see the opportunity - just let it go. See if you can live for 30 minutes without checking your email or phone. Can you be stronger than your urges?

πŸ’‘ Remember:  As James Clear says: If you can get just 1% better each day - you’ll end up with results that are nearly 37 times better after one year.” Building trading discipline is a gradual process. And even small changes make a big difference as time goes on.


5. The Power of Rewards in Building Trading Discipline

Reward your successes.
 When you successfully show a new level of discipline, give yourself a reward that doesn’t break the bank. Think of the reward you are going to give yourself upfront!

πŸ’‘ Things to consider: Rewards don’t always have to be materialistic. They can also be experiences or activities that you enjoy. For example, you might reward yourself with a day off to spend outdoors or a movie night. And don't forget about celebrating your trading discipline milestones with loved ones and friends. They're commonly sharing your trading downfalls so let them share with you also the great things happening!


6. Trading Discipline's Prime Time: Capitalizing on Morning Hours

Discipline tends to be higher in the morning, providing an ideal window for self-improvement. Capitalize on this time by creating and adhering to a morning routine, which helps strengthen your discipline "muscle." This approach not only leverages the natural increase in discipline during the early hours but also sets a positive tone for the rest of the day!


7. Planning for Setbacks: Strategies for Maintaining Discipline

Have a plan for when you falter.
 What will you do when you start to slip? What is your plan when you have the urge to simply throw all your trading rules out the window, get into a trade without checking if your parameters are met, or jump into a random transaction just because you saw a tweet from someone you don’t even know?


πŸ’‘ It's crucial to have a plan of action. Think about what are you going to do in this situation. Here are some practical strategies to help you deal with those challenging moments:

  1. Call someone. It's great way to distract yourself for a moment.
  2. Get away from your trading desk. Stepping away from your trading desk helps clear your mind and reduces the urge to make impulsive trades.
  3. Hit the “Close” button to shut down your trading platform,
  4. Sit on your hands (for real!). This unusual but effective tactic serves as a physical reminder to pause and rethink before making any trading moves.


8. In Trading Discipline slow progress is better than no progress!

A little progress each day is more than enough.
Trading is more like a marathon, not a race. And big, rapid changes rarely stick unless life and limb are at risk. So be thrilled with each of your accomplishments in this matter. Every little step toward discipline means progress for you (!) and decides whether you are going forward or backward. 

πŸ’‘ Important Note: Stagnation is a step backward; there is no standing still in trading.


9. Trading Discipline means: Action Over Outcome

Focus on the action rather than the desired outcome.
 If you want to lose weight, the scale matters. However, it’s even more important to follow your diet day in and day out. The same with trading, if you want to make money consistently you need to demonstrate consistency in your behavior. That is take consistent actions that will lead you towards the outcome. And as the word “outcome” itself says, your results have to come out of something. And that something is what you do, every single day. 

Practise discipline and keep doing the right things and the results are guaranteed!


Trading Discipline Myth

Lastly, I want to talk with you about the myth created around not only Trading Discipline but around Discipline overall. As a society, we tend to admire people with high levels of discipline. Often associate discipline with elite soldiers or Buddhist monks, but most people can train to have just as much discipline as either of these groups! 

πŸ’‘ Remember: Discipline simply means choosing the future you desire over what you desire now. And since you are the one who controls your choices, even though sometimes you tell yourself otherwise, it’s all in your hands!

It's really important to understand that the level of your discipline impacts the quality of your future. Are you willing to give up your short-term pleasures for a great future?

If so, you can have the future you desire!

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