Discipline is the practice of forcing people to obey standards and rules, and to be punished if they do not. Discipline is the ability to behave in a controlled manner, which includes certain rules. The good thing about trading discipline is that we are responsible for whether we follow our rules. It allows the trader to follow his system for a long time by following the rules, the right size of his position and risk management.
Traders often feel like two different people. They are calm and rational when the market is closed and it is up to them to study their position. When the market opens and prices start to change, however, a person’s emotions and ego interfere with when and where to open or close. This can stop them from following their plan strictly.
Lack of discipline when entering a position can have a devastating effect on your account. Whether it’s because you miss good signals or fear prevents you from doing something when you see a good position. You have to accept that you will have losses in trading anyway, and if you want to keep trading you will have to swallow them. If you feel stressed or unable to think soberly, but there is an opportunity in the market according to your strategy – minimize the size of the position until the idea crystallizes.
“My point is that a missing deal is a much more serious mistake than a bad deal.”
FOMO (Fear of missing out) can cause a trader to lose discipline and enter a trade too late and be left with a poor risk / return ratio.
Entering a trade too early can also cause us to lose discipline. Trying to overtake the signal to enter at a better price is extremely dangerous. If you do not have the discipline to wait for the execution of your signal, you have no advantage over other traders.
The lack of a system or its non-implementation suggests that there is no way to manage your business effectively. How long do you think it is to live a company that works without plans, without business systems and without rules? When there are no rules, everything is a mistake.
The discipline of following your established trading system is an advantage. If your system has a quantified profit margin on a series of trades or you are a discreet trader, your job is simply to be a disciplined trader and let your strengths play out over time.
Discipline can come from believing in yourself and your own trading system, so that your plan can be used as a compass rather than as an offer.
Junior Trader Kameliya Ivanova