25 points mantra discipline for day trading By Douglas E. Zalesky Review the following 25 Rules of Trading Discipline. You must condition yourself to behave with discipline over and over again. Read through the rules every day before the trading session begins. It doesnt take more than three minutes to read through them. Think of the exercise as praying reminding you how to conduct yourself throughout the trading session. 1)THE MARKET PAYS YOU TO BE DISCIPLINED. Trading with discipline will put more money in your pocket and take less money out. The one constant truth concerning the markets is that discipline = increased profits. 2) BE DISCIPLINED EVERY DAY, IN EVERY TRADE, AND THE MARKET WILL REWARD YOU. BUT DON’T CLAIM TO BE DISCIPLINED IF YOU ARE NOT 100 PERCENT OF THE TIME. If you trade with discipline nine out of ten trades, then you can’t claim to be a disciplined trader. It is the one undisciplined trade that will really hurt your overall performance for the day. Discipline must be practiced on every trade. Typically it is in recognizing less of a loss on a losing trade than if you were stubborn and held on too long to a bad trade. Thus, if I lose $200 on a trade, but I would have lost $1,000 if I had remained in that losing trade, I can claim that I “saved” myself $800 in additional losses by exiting the bad trade with haste. 3) ALWAYS LOWER YOUR TRADE SIZE WHEN YOU’RE TRADING POORLY. All good traders follow this rule. 4) NEVER TURN A WINNER INTO A LOSER. We have all violated this rule. However, it should be our goal to try harder not to violate it in the future. What we are really talking about here is the greed factor. The market has rewarded you by moving in the direction of your position, however, you are not satisfied with a small winner. Thus you hold onto the trade in the hopes of a larger gain, only to watch the market turn and move against you. Of course, inevitably you now hesitate and the trade further deteriorates into a substantial loss. Don’t be greedy. 5) YOUR BIGGEST LOSER CAN’T EXCEED YOUR BIGGEST WINNER. 6) DEVELOP A METHODOLOGY AND STICK WITH IT. DON’T CHANGE METHODOLOGIES FROM DAY TO DAY. 7) BE YOURSELF.DON’T TRY TO BE SOMEONE ELSE. In all of my years as a trader I never traded more than a 50 lot on any individual trade. Sure, I would have liked to be able to trade like colleagues in the pit who were regularly trading 100 or 200 lots per trade. However, I didn’t possess the emotional or psychological skill set necessary to trade such big size. That’s OK. I knew that my comfort zone was somewhere between 10 and 20 lots per trade. Typically, if I traded more than 20 lots, I would “butcher” the trade. Emotionally I could not handle that size. The trade would inevitably turn into a loser because I could not trade with the same talent level that I possessed with a 10 lot. Learn to accept your comfort zone as it relates to trade size. You are who you are. 8) YOU ALWAYS WANT TO BE ABLE TO COME BACK AND PLAY THE NEXT DAY. I require my students to place daily downside limits on their performance. For example, your daily loss limit can never exceed $500. Once you reach the $500 loss limit, you must turn your PC off and call it a day. You can always come back tomorrow. 9) EARN THE RIGHT TO TRADE BIGGER Too many new traders think that because they have $25,000 equity in their trading account that they somehow have the right to trade with big lots. This cannot be further from the truth. If you can’t trade a one lot successfully, what makes you think that you have the right to trade a 10 lot? 10) GET OUT OF YOUR LOSERS. You are not a “loser” because you have a losing trade on. You are, however, a loser if you do not get out of the losing trade once you recognize that the trade is no good. It’s amazing to me how accurate your gut is as a market indicator. If, in your gut, you have the idea that the trade is no good then it’s probably no good. Time to exit. 11) THE FIRST LOSS IS THE BEST LOSS. Once you come to the realization that your trade is no good its best to exit immediately. 12) DON’T HOPE AND PRAY. IF YOU DO, YOU WILL LOSE. 13) DON’T WORRY ABOUT NEWS. IT’S HISTORY. 14) DON’T SPECULATE. IF YOU DO,YOU WILL LOSE. Dont be a speculator. Be a trader. 15) LOVE TO LOSE MONEY. "What do you mean, love to lose money. Are you crazy?" No, I'm not crazy. What I mean is to accept the fact that you are going to have losing trades throughout the trading session. Get out of your losers quickly. Love to get out of your losers quickly. It will save you a lot of trading capital and will make you a much better trader. 16) IF YOUR TRADE IS NOT GOING ANYWHERE IN A GIVEN TIMEFRAME, IT’S TIME TO EXIT. The market is not going anywhere. It is a waste of time, capital and emotional energy. Its much better to wait for the market to heat up a little and then place your trade. 17) NEVER TAKE A BIG LOSS. ONLY A BIG LOSS CAN HURT YOU. Please review rules #5, #8, #10, #11 and #15. If you follow any one of these rules you will never violate rule #17. 18) MAKE A LITTLE BIT EVERYDAY. DIG YOUR DITCHES. DON’T FILL THEM IN. It is amazing how quickly your trading account will build up over time just by making a little bit every day. 19) HIT SINGLES NOT HOME RUNS. You should never approach a trade with the idea that its going to be a huge winner. Sometimes they turn out that way, but the times that I have a hit a home run on a position is most definitely luck, not skill. 20) CONSISTENCY BUILDS CONFIDENCE AND CONTROL. Dont you think that this consistency allowed me to be extremely confident? I knew that I was going to make money on any given day. Why would I think otherwise? Making a little bit everyday (Rules #18 and #19) will allow you to trade throughout the trading session with confidence and control. 21) LEARN TO SWEAT OUT (SCALE OUT) YOUR WINNERS. 22) MAKE THE SAME TYPE OF TRADES OVER AND OVER AGAIN – BE A BRICKLAYER. The same consistency applies to traders, as well. Please review Rules #6 and #20. I have not changed my trading methodology and execution strategy in 20 years. I guess I'm the bricklayer. 23) DON’T OVER-ANALYZE. DON’T PROCRASTINATE. DON’T HESITATE. IF YOU DO,YOU WILL LOSE. I can't tell you how many times traders have come into my office terribly depressed because they "knew" the market was going one way or another; however, they failed to put a position on. When I ask them why they did not put the trade on, their responses are always the same: they did not want to chase the market We don't get paid in this business unless we put the trade on. Don't overanalyze the trade. Place the trade and then manage it. If you're wrong, get out. But you'll never be right unless you actually make the trade. 24) ALL TRADERS ARE CREATED EQUAL IN THE EYES OF THE MARKET. We all start out the day the same. We all start out at zero. Once the bell rings and trading begins, it’s how we conduct ourselves from a behavioral standpoint that will dictate whether or not we will make money on the day. If you follow the 25 Rules, you should do well. If you do not, you will do poorly. 25) IT’S THE MARKET ITSELF THAT WIELDS THE ULTIMATE SCALE OF JUSTICE. The market moves wherever it wants to go. It does not care about you or me. It does not play favorites. It does not discriminate. It does not intentionally harm any one individual. The market is always right. You must learn to respect the market. The market will mercilessly punish you if you do not play by the Rules. Learn to condition yourself to play by the 25 Rules of Trading Discipline and you will be rewarded.
Discipline is a BIG deal! Discipline to not be lazy and do the work... research, chart work, pay "close-enough" attention (which is very close, BTW).... discipline to exercise stops....discipline to go on the risk both when you're on time and when "a little late". Good discipline requires much from a trader. And don't forget... K.I.S.S.
any ideas on how to implement these 25? the best way not to lose money is to go to sleep during market hours.
25 is too many. A contented trader is one who knows what is best in life 1. Crush your enemies. 2. See them driven before you. 3. Hear the lamentations of their women.
Somebody started a thread a time back which asked the question... "How do I make myself do the right thing?" (That's "discipline", right?) Doubt anyone has an answer. Quoting Yoda.... "There is no try. You either do or do not".
for the market its irrelevant who you are and what you are what is disciplined? disciplined are the acts based on predefined by yourself rules.. that's all if rules are shitty then it does not matter how disciplined you are in following them - you will lose baloney size to be maintained you not trading poorly (if your method works) or well, it just the random distribution of the wins and loses its not up to the trader , its up to the method remember your earlier statement about being disciplined ? well then have the fucken discipline to stick to the method regardless or what's coming at you - the win or the loss yes it can, so what? so far that's the only correct statement also its does not address the situation in which most wannabes are - what to do when you developing the method and not yet know if its working or not, how long to stick to it? agree on top of that regardless of how much one tries one always will be only himself so do not imitate - it does not work so? how to make sure you will be able come back? - have a small enough position (considering the method works)... size kills... absolute size of the daily loss is irrelevant , size of the loss to be determined by the method only it comes naturally do not get out out of position just because it turned against you - if and when to get out to be to be determined by the method only (again remember all the earlier talk about discipline - well that's the time to show some balls) baloney as i said earlier - it just random distribution hope and pray does not hurt... but won't help either each trader hopes and prays that his method works... depends on what news we talking about if you just heard that a plain flew in freedom tower - sell, or close the position -its history in a making.. and you do not want to be involved baloney trading is speculation in its pure form baloney one has to accept loses as part of the job but to say to love it is akin to say to the boxer to love the hook in the chin... love it.... whoever wrote this list is probably some "master" trader from the prop to be determined by the method only to be determined by the method only to be determined by the method only and what builds consistency? baloney stick with method stick with the method, you have nothing else baloney one has to determine how to apply method properly its required sometimes a lot of thinking and analyzing the situation hesitation is ok if you could not figure out how to apply the method in particular case - then do not take the trade market has no eyes, trader has and trader views the market only through the prism of the method not all trades are created equal even trough the prism of the method, but all of them are within the certain range of probabilities that the trader accepted when he created the method market is just force of nature .. there is no justice or unjuistice in it either trader figured out how to deal with these forces of nature (and he lives and prospers) or not (then he suffers and dies)
During his career, Douglas E. Zalesky was an Independent Floor Trader in the US 30-Year Treasury Bond Pit (CBOT) from 1983 to 1988. In 1988, Doug was a member of the London International Financial Futures Exchange where he was an Independent Floor Trader in the UK Gilt Pit. From 1989 to 1991, he returned to the CBOT as an Independent Floor Trader in the Bond Pit. In 1991, he became a member of the Chicago Mercantile Exchange where he was an Independent Floor Trader in the S&P 500 Pit. Sadly, Doug passed away on September 24, 2009