Self-reverence, self-knowledge, self-control; these three alone lead one to sovereign power.Are you having trouble trading with consistency? Does your account balance rise and fall sporadically and do you experience a rollercoaster of emotions? Chances are you plan your trades, but is it likely that you don't stick with your plan? Sometimes you follow your plan, but at other times you abandon it on a whim. You need to practice discipline. I'm sure you have heard countless times, "the winning trader is a disciplined trader". If you have a problem with discipline its worth building up this skill.Some are highly disciplined and very self controlled and others are impulsive. Which are you?
Alfred Lord Tennyson
The very disciplined person follows rules methodically, and is careful to control his or her impulses. If you are not this type I'm sure you know someone who is. They pay off their credit card bills every month, they are never late for an appointment, they plan every detail of their lives. Although these characteristics can be ideal for trading they are not always. This personality type tends to have trouble taking risks, preferring a sure thing, and trading outcomes are rarely sure things. Often winning traders are the kind of people who prefer living a little on the wild side. They do not recklessly seek out risk like a gambler does, but they do not mind it. Relatively speaking, they do 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?
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. 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 ia not necessarily the case that a disciplined trader is disciplined in all aspects of his or her life, but it helps. The life approach we use in everyday life may blend over into our trading life.
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, and it's vital that we do everything we can to increase it.
Reprint from PrudentTrader Archives July 2005