Cultivating Self-Control and Discipline

Discussion in 'Trading' started by Joe Ross, Mar 26, 2010.

  1. Cultivating discipline and self-control is vital for consistent and profitable trading. You implement proven trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit. It's like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. But the winning player is the person who first develops the skill to make the shot consistently, so that at every possible opportunity, the ball is likely to go through the basket. To a great extent, consistency is the key. If the player uses one approach one time and a different approach at another time, performance is haphazard.

    It's the same for trading. One must trade consistently, following a specific trading plan on each and every single trade. This allows the law of averages to work in your favor, so that across the series of trades, you will make an overall profit. If you follow the plan sometimes and abandon it at other times, you throw off the probabilities. Suppose you used a strategy that had a track record of 80%. Under the best-case scenario, you could only expect to win 80% of the time. But since history doesn't always repeat itself, it's likely that you will win less than 80% of the time. If you don't execute the trading strategy the same way each time, you will decrease your winning odds. And fewer winning trades may mean an overall loss. That's why discipline and self-control are so important.

    With discipline and self-control comes profitability. Don't let unjustified wins interfere with your ability to maintain discipline and self-control. Follow your trading plan, and reinforce the idea that if you follow your plan, you will end up with profits in the long run. If you abandon your trading plan, and get an unjustified win, you may feel good in the short term, but you'll pay a long term price when it comes to your ability to maintain self-control. So clearly define your trades and your trading plan (discipline), and stick with your trading plan (self-control). The justified wins you receive from following your plan with help you develop an unwavering pattern of disciplined and controlled trading.
  2. aaa10247


    Well Said.