As we all Discipline is the keystone of trading. Do you think it is posible to develop a perfect Discipline in yourself? Let's say one is more or less disciplined...when he's more disciplined he makes money, when he's less disciplined he loses. Are there any special exercises for developing Discipline in yourself? Anything helpful at all?
step one is acknowledging one's weaknesses. some can be overcome, some have to be worked around. denying them is the fast lane to failure. This is what I love so much about trading: the rules that make a good life also make good trading.
Discipline, Self-programming is the hardest thing that I've ever had to do in my life. Once you get into a bad habit, it is really hard to get out of it. However, entire personality changes are downright brutally hard to enact. I think it is human nature to think that we are all perfect in our own ways. We might not thing we are perfect consciously, but subconsciously are minds don't want to change a thing. I have daytraded here and there in the past, and I was a victim of human impulse. I don't know how many times I bought the high of the day simply because the price started running up and I got all excited and started to shake and click the mouse like a madman while thinking, "oooohh ohhhhh!!! OHHHHHH!!! It's going UP!!! OHHHHHHH GOTTA BUY IT ! IT'S ROCKETING!! OHHHhhhh ohhhhh ohhh!!!" I'd lose my cool approach and turn into an emotional monkey that would click, type and work my way into a frenzy. Then, as soon as I bought the HOD, it would turn around and I'd again start shaking the mouse around while thinking, "Ohhhh Ohhhhh Ohhhhhh!!! OHHHHhhhhhh SHIT!!!" At the end of the day I told myself that was stupid and I wasn't being cool about it. So I said I'd never do that again. I then did that the next day. So then I stopped for a bit and just learned to watch the price action and, when it started making a serious run, I learned to control my emotions by not reacting to the event. It was REALLY REALLY hard. I think anyone who suddenly sees a major breakout or the price-action on the tape can get a little hyper and crazy about all that action. However, you are exactly right. Discipline is a hard thing to develop on your own. You also just can't make personality modifications like that without making them throughout your entire day. You should always concentrate on the here and now and try work on your bad habits throughout life -- not just in trading. I quit smoking because it was a really bad habit that I'd develop when things got very stressful in my life. Now when I get stressed out, I go to the gym and run it off on the treadmill.
I agree that identifying one's weakness is important to improving one's discipline. If one is aware what these are that contributes to losses, one should be able to eliminate them. In my case, my trading journal helped me identify my common mistakes, such as not adhering to set protective stops, not pulling the trigger, etc. Because these common mistakes were the cause of my losses or missed opportunities, I worked on eliminating them one by one. I still have some mistakes to work on but after eliminating my most common mistakes, I found that my trading has improved and my trading account finally reversed from its earlier downtrend. Good luck.
To be honest with you, I'm not all that disciplined a trader but I have been making good, consistent money for a long time now. Since I'm of course only playing with profits I've made (everything else I bank), I've developed a rather cool, care free state of mind for my trading. Nothing really phases me. If I get burnt, so what? I sell quickly for a loss and go back to my gameplan. I know that I will make consistent money because I have an edge. The most important rule I've developed for myself is that I will always sell a stock for a loss and will never "hope" that it goes back up. I think this is the most important concept for traders to master. It's difficult to do, but once you've learned the hard way, you won't want to experience the pain associated with huge losses. I think a huge part of my trading style would go against what others recommend. For example, "don't hold overnight". This seems to be one of the most fundamental principles associated with daytrading. But you know what? I've held (relatively small) positions overnight a few times this year and it was no big deal. Another strict rule I've set for myself include two "no trading" periods from 9:30 to 9:45 and 3:45 to 4:00. This is for three reasons: volatility is my enemy and these seem to be the times when stocks are most volatile; I trade stocks that are less than a buck and if you look back historically at stocks that are halted during market hours, they are almost always halted during these time ranges; and finally, I don't want to hold positions overnight so not trading in that last 15 minutes certainly helps. Later, -Scalpa
OPTIONAL777, You're right. I've neglected to notice that I've exceeded the allowable number of posts per day here on Elite Trader. Thank you so much for pointing this out to me.
Correction: It's not inherently difficult to do; but it does seem most people find it very difficult to do. I can tell you right now that, in my case, it is simple as breathing. Stop hit? Take loss. Stop hit? Take loss. All day long. No sweat.