Can you learn to be discplined with your trading - Discuss

oh yes, that old bug bear Discipline. Certainly I know certain people (non traders) who are more disciplined than others and wonder why this is so? upbringing? environment? mixture of both?

anyways I was reading what a psychologist said about discipline in trading, he was saying not being disciplined in trading could be compared to not following through on an exercise plan or not following a diet you have set yourself.

Do you think it is possible to learn to be more disciplined?

For me personally this means:

(i) not letting losing trades run
(ii) taking the majority if not all of the profit where price 'should go'
(iii) setting a stop on entry and leaving it there

GTTY

I think so absolutely yes IF you want it badly enough, that I think is key.

One of the best books on this subject is Trading in the Zone

It's really down to how burning your desire is to lose weight, gain health benefits through exercising more, become a better trader, etc.

My core belief is that none of those involve rocket sciences exactly, most people know what needs to be done to get there, but most lack the complete and total commitnment to actually abstain from that second helping, taking the stairs instead of the lift, or for trading, cutting winners short while letting losers run coz losing feels crappy and cashing in rings the right bells.



Discipline can be learned, but just like a muscle needs exercise to grow or at least not shrink, discipline needs training, and for you to leave your comfort zone.

The problems attributed to lack of discipline in trading rarely are due to a lack of discipline. In the same fashion, a trained trader will virtually never take an impulse or revenge trade. It just isn't part of the trained traders "vocabulary".

If you are trying to be professional, you shouldn't make it part of your vocabulary. You make 1 revenge trade then you should ground yourself from trading for 5 days, the next time 10 days, either you will stop revenge trading or stop trading.

Discipline is harder to correct in this manner because we need to look at what discipline problems really are and what they really stem from.

* Trader not taking a stop loss.

Most of the time, not taking the stop loss is due to uncertainty about whether it is the right course of action to take the stop loss. So, in this case the trader's discipline problem was an "uncertainty" problem

* Trader decides to change the rules of his system or risk more then his plan called.

In most of the cases, this is not a discipline problem either. The real problem is not being clear to oneself what one really wants. One part of the trader thinks he's not willing to risk more then $x while another part says, he's really okay with risking $y. This is often a battle inside the traders mind of competing interest. The next explanation will clarify.

* Global vs Local optimimums, Maximizing Profit vs Minimizing Risk of Failure (Maximizing Survival)

This is a bit hard to explain but is likely a source of traders frustrations. Due to a traders account size and what he feels psychologically okay with losing, he may decide he needs to trade with a $500 stop loss. However, the true optimal stop loss for the trade might be $1,000. So, if we were to take $1,000 risk per trade, he'd always make more at the end of the year. Well, what might happen is the trader decides to maximize profit in this situation versus maximizing survival. He really wasn't undisciplined, he just decided in this instant to change his goals but doesn't understand that.

* Unexpected events

Discipline itself refers to acting in a way in accordance to ones rules. However, that implies that one has considered all the possible things that can happen. But what about when things happen that one didn't plan for? Is discipline the problem or a lack of planning?

As such, rules have real limitations whereas principles can be effective. I call this Principles Over Rules.

So, if most of traders problems they think are discipline related aren't then what are most traders real discipline problems? Good question and I'd suggest lack of study, lack of off market work, lack of testing and idea generation, etc. Basically, not doing the proper amount of work. All of those are discipline problems.

Hi SCM

I think one of the disciplines that most retail traders fail to adhere to - is the amount of time, study and commitment it takes to get a regular profitable level.

Back when I started - nobody - and no forum or courses told me that if I was part time and limited to say 10 -20 hrs a week it would take me 2 yrs plus to even get to an average basic intermediate level and then another 2- 5 yrs to fine tune and hone my methods to an above average level where I might make profits every month - or at least every year.

I have to disagree with the guys who say trading should be kept simple and you can prosper with good returns

For me simple methods gave me simple results - ie they were not very good and I might end up with 10% ROR after 2 or 3 months of trading and still not confident to increase stake to an higher level

To be profitable day trading every week and really every day - you have to so many skills never normally discussed. My own intraday methods are complex because I want accuracy and very high probability - which is possible once you have done the time and the study.

Yes disciplines can be taught and then adhered to - but because the market is dynamic you need also flexibility built into your rules rather than strict rigid - black or white - yes or no flow chart type analysis

Over time - ie after 10,000 hrs of live chart watching - it becomes an easier task - but how many new traders only get to 2 or 3 k of live chart watching and then give up - ie they don't do the real time needed and so all the other disciplines they have in place are then just wasted -as they still fail

Regards

F

F, while we'll have to agree to disagree on the necessity or lack of of net profitable trading needing to be complex, I totally agree that until one gets there where one wants to be you do need those 10 000 hours Malcolm Gladwell wrote about in "Outliers", for me that was definitely the case as well.

BSD said:

F, while we'll have to agree to disagree on the necessity or lack of of net profitable trading needing to be complex, I totally agree that until one gets there where one wants to be you do need those 10 000 hours Malcolm Gladwell wrote about in "Outliers", for me that was definitely the case as well.

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just saw your photo. Are you related to Boris Becker?

Lol NO !!!

sonofcablemonster said:

oh yes, that old bug bear Discipline. Certainly I know certain people (non traders) who are more disciplined than others and wonder why this is so? upbringing? environment? mixture of both?

anyways I was reading what a psychologist said about discipline in trading, he was saying not being disciplined in trading could be compared to not following through on an exercise plan or not following a diet you have set yourself.

Do you think it is possible to learn to be more disciplined?

For me personally this means:

(i) not letting losing trades run
(ii) taking the majority if not all of the profit where price 'should go'
(iii) setting a stop on entry and leaving it there

GTTY

Click to expand...

If the army can teach men to follow instructions when bullets are flying and bombs could go off, surely discipline can be learnt for something like trading.

And yes, I think it is similar to not being able to follow through on an exercise plan or diet. You're either in control of your actions or you're not. If you're not, then work on getting in control.

BSD said:

Lol NO !!!

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Worrying that it's top half only. I suspect red trousers!

Haha no red trousers, just red socks

I think i became more disciplined and a better trader when i started to become a better loser.

I remember my old demo accounts, I didn't lose money but i didn't make money either. But i lead myself into this false sense of security that i was making mistakes that I wouldn't make when I went live. Yet i went live and started to lose money.

The problem? Not my method, not my risk managment, just TOO MANY MISTAKES!

I went back to demo trading, but this time I focused on my losing trades. I was determined to make sure that ever loss was a perfect trade. None of this looking back and saying "oh i shouldn't have take that trade because of XYZ, or I shouldn't of done that because I didn't check the news"

Every loss must be perfect. Where by if the situation was run again, you'd still take the trade every time. And if its a loss, so be it, on to the next one.

The result for me was less trades and a higher strike rate.

Be a perfect loser! The winners will take care of themselves

He's getting there

ffsear said:

I think i became more disciplined and a better trader when i started to become a better loser.

I remember my old demo accounts, I didn't lose money but i didn't make money either. But i lead myself into this false sense of security that i was making mistakes that I wouldn't make when I went live. Yet i went live and started to lose money.

The problem? Not my method, not my risk managment, just TOO MANY MISTAKES!

I went back to demo trading, but this time I focused on my losing trades. I was determined to make sure that ever loss was a perfect trade. None of this looking back and saying "oh i shouldn't have take that trade because of XYZ, or I shouldn't of done that because I didn't check the news"

Every loss must be perfect. Where by if the situation was run again, you'd still take the trade every time. And if its a loss, so be it, on to the next one.

The result for me was less trades and a higher strike rate.

Be a perfect loser! The winners will take care of themselves

Click to expand...

By George you got it !!
LESS trades

most definitely!

sonofcablemonster said:

oh yes, that old bug bear Discipline. Certainly I know certain people (non traders) who are more disciplined than others and wonder why this is so? upbringing? environment? mixture of both?

anyways I was reading what a psychologist said about discipline in trading, he was saying not being disciplined in trading could be compared to not following through on an exercise plan or not following a diet you have set yourself.

Do you think it is possible to learn to be more disciplined?

For me personally this means:

(i) not letting losing trades run
(ii) taking the majority if not all of the profit where price 'should go'
(iii) setting a stop on entry and leaving it there

GTTY

Click to expand...

You can most definitely learn to become disciplined. If you don't learn it you won't last long in the markets. I have been an institutional trader since I graduated college and the two things I learned were very important were discipline and having an obsession with good risk/reward ratios when taking trades. One of the things that helped me learn to be more disciplined was keeping a detailed trading journal of all my trades. When I was a trainee they had me use screen recording software so that I could record video of my screen during my entire trading day. I would sift through the video and study trades that were winners and loser and then break down why they worked or didn't work. Keeping a detailed journal was crucial for me because I was able to practice reading it each morning during my metro ride to work and then writing in it at the end of each trading day. It allowed me to find common mistakes that I was making and avoid making them again. I also made a bunch of sticky notes with my trading rules/guidelines and stuck them all over my desk so that I would see them each day! After awhile I didn't need them. I still use my journal for documentation purposes and it is also helpful for me to write down the rules sometimes so I stay sharp!

IloveFXTrading123 said:

You can most definitely learn to become disciplined. If you don't learn it you won't last long in the markets. I have been an institutional trader since I graduated college and the two things I learned were very important were discipline and having an obsession with good risk/reward ratios when taking trades. One of the things that helped me learn to be more disciplined was keeping a detailed trading journal of all my trades. When I was a trainee they had me use screen recording software so that I could record video of my screen during my entire trading day. I would sift through the video and study trades that were winners and loser and then break down why they worked or didn't work. Keeping a detailed journal was crucial for me because I was able to practice reading it each morning during my metro ride to work and then writing in it at the end of each trading day. It allowed me to find common mistakes that I was making and avoid making them again. I also made a bunch of sticky notes with my trading rules/guidelines and stuck them all over my desk so that I would see them each day! After awhile I didn't need them. I still use my journal for documentation purposes and it is also helpful for me to write down the rules sometimes so I stay sharp!

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hmmm, good strategy IMO,
journaling trades is a sure proven way for new traders to improve. Followed a similar course too,but it wasn't optional in my case.

One thing i did to improve my trading is enter only the area that i marked and once i set my TP and SL, just just turn off my pc n get on with my life. :cheesy:

I force discipline on myself by setting trailing stops/or buying a protective put on a fixed formula I designed after entering every position. This has done wonders for me for preventing from holding trades to long. The key is finding the right balance to prevent yourself from getting stopped out too early.