July 30, 2008 at 7:47 am | | Comments 8

Discipline is a Habit

Discipline means being willing to wait. Wait for your setup. Wait for choppy conditions to pass. Wait to increase your trade size until your recent results warrant it. Trading requires that ability from us, and if we don’t have it… well, the market will teach it to us!

As traders, we have to let conditions emerge which are most favorable for our trading. Our failure to do that can result in numerous outcomes, none of which are good!

Discipline means we close out a trade when our line in the sand is crossed, but it also means we stick with a winning trade while waiting for the move to develop. It means we don’t get bored out of trades – we stick with our game plan and avoid micro-managing positions.

But there’s one thing about discipline which few stop to recognize: it’s a habit.

Decisions, Decisions

That word, habit, has several connotations. There are good habits, such as trading responsibly or brushing your teeth before bedtime 😉 . And there are also bad habits, like losing control of your trading or biting your nails. So while “good” and “bad” might be relative phrases, it’s important to note that both of them are cultivated over time to become second-nature.

If given the choice, who would take bad habits over good when it comes to your trading? Nobody, right? Well here’s the thing: you do have a choice. You’re reinforcing some kind of habits every day – but which kind?

Look Both Ways Before Crossing ‘The Street’

This market has been a little wild lately, and while some traders love the chaos, others may not find it ideal. Whichever group you fall into, be honest about it with yourself. If you fall into the latter category (not lovin’ it), this is for you!

Many of us want to push buttons all the time and live up to our “active trader” reputation, but that’s not always good. If you’re struggling to find your way in this tape, be willing to take a wait-and-see approach…there’s nothing wrong with that. It’s far better than just making trades to see what happens, that is for sure.

The Road to Recovery

Making discipline a habit means a willingness to do the hard thing when you need to because you know it’s right. In your personal life that may mean diet, exercise, and just taking care of things which need doing even though they are no fun!

And while those kinds of things may be purely personal (not trading), you’d better believe they will carry over into other areas of your life – like trading. Remember, discipline is a habit. So start making it a habit in all that you do.

Begin with a little discipline and keep building on it. There’s momentum there. As habits start to take hold, you’ll find that your discipline improves in your trading, allowing you to better follow your intended game plan without having that internal struggle as often as you used to.

Staying disciplined might not ever become easy, but that just reiterates the fact that it’s worthwhile. Making the choice to be disciplined in every aspect of our lives will definitely carry over into trading, making you a better protector of your capital when you’re wrong and a more profitable trader when you’re right.

Now that’s one habit with some appeal!

Trade well today,

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

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  1. I agree. It’s not easy to be a disciplined trader, but it’s crucial to your long-term success. A disciplined trader understands the importance of developing good risk management skills.

    As an options rookie, it’s never too early to begin working on learning those skills. If you are paper trading with practice money, don’t treat it as a game. Pretend the money is real and manage it well.

  2. Good points Mark, and thanks for the comment! I like your view that it’s crucial to long-term success, and that’s something that’s easy to lose sight of for short-term traders.

    We want profits now, we want activity now, and while that is OK we always need to keep our discipline in check so that we don’t ever endanger our long-term odds for survival and success.

    Stay in the game and you’ll keep having chance after chance to profit.


  3. Excellent!! Just what I needed to hear today.
    Discipline means being willing to wait. Wait for your setup.
    I’m writing that on my trading desk.

  4. Thanks Joe, appreciate the comment. I think it’s a great idea to have some important reminders right on our trading desk from time to time – thanks for sharing!


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