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Discipline: "To know and not to do, is not to know"

 

As I sit here contemplating the subject of discipline, I think back at the early stages of my trading career. I heard the word so often but never really understood how it fit in with trading the markets.

 

First off, let's get to know what the word really means: The dictionary describes it like this:

 

"Training to act in accordance with rules"

 

When someone is winning or succeeding at something, discipline is easy to follow. When someone has experienced defeat, discipline is a wild animal that is looking for a victim to attack. Better said, when your losing, the rules go out the window.

 

Now think about that in your trading career. Its 9:50 am EST and you have increased your account for the day by some $500. That's $1500 an hour! You sit on the sidelines not wanting to risk this precious gain only taking the most perfect textbook patterns. How easy is that? Your momentarily happy and go out of your way to kiss your spouse, pet the dog or cat, nothing can get you down. It's a great day!

 

We'll, let's take a peek at a different scenario. It's 9:50 am EST and you just lost two trades in a row; you are down $500 in your trading account and you absolutely despise hearing someone that is having a great trading morning. Your spouse says good morning and you don't answer or say something to appease her/him so they won't talk to you for a while. The family pet comes over and all you can say is "beat it Rover" and your immediate thoughts are, I have got to get this money back. It's 10:00 am, you see a questionable trading pattern and if you tilt your head to the left and then turn your monitor at a 45 degree angle you can see signs of glory that has $500 written all over it. Your trading plan just went out the window and if you listen closely, you can hear the snarls of the un-caged animal lurking over head. Oh, by the way, his name is "Discipline". You take the trade and you earn your $500 back. What a great day just to be even. The cycle continues until the stock market zaps every last dollar from your trading account and you become another statistic. This just doesn't work you say, as you fade into the distance never to attempt trading again. You lay dormant as another victim that has been serious wounded by the faceless market.

 

Does any of this sound familiar? I bet you can begin to relate to the reasoning behind this message.

 

My friend, discipline is an animal that intends to throw you off course, ditch your plan and humble you. If you have a trading plan, (and you should) you need to honor that plan at all cost of temptation. I know you want to rid the grief of losing for that day so you do what most people do, they move to HOPE MODE and that just wont cut it. You need to find a way to make certain your plan will stay intact when days like this come, and they will! Design you trading plan with this in mind. Set parameters on how you will handle the rest of the trading day. For example: will you scalp only; reduce your risk; only be allowed to trade once more that day if you lose; there are a number of things you can insert into your plan to avoid this discipline killer. Once you experience how powerful it is to just follow your plan and not give way to "Hope Mode" the faster you will learn the skill of discipline.

 

I would be happy to see you join us and to answer any questions you may have.

 

Good trading!

 

Jeff Yates

Contributing Editor

Interactive Trading Room Moderator

Gap, Intra-Day and Swing Trading Specialist

Instructor and Traders Coach

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