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How to Maintain Discipline in Trading: Mastering the Art of Consistency

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Trading, or buying and selling stocks, can be exciting but challenging too. It’s full of ups, downs, twists, and turns. In this exciting world, making quick decisions based on feelings, not facts, is easy, which can lead to trouble.

So, how do seasoned traders deal with this complexity? The answer is simple: they trust the Power of discipline.

So, what is discipline in trading?

In layperson’s terms, it means following a set plan and not letting emotions or sudden changes in the market push you to make hasty decisions. It’s like staying on your planned path, regardless of the distractions that might arise along the way.

Think about discipline in trading this way.

Let’s say you’re on a treasure hunt. You have a map and a clear path to follow.

But imagine if you constantly kept getting lost on the path, distracted by every shiny object you saw. You’d probably never find the treasure. Right? That’s what happens when you lack discipline in trading.

Nick Leeson’s story is a prime example of discipline.

Nick was the star trader at one of Britain’s oldest English banks in 1995, called Barings Bank.

But over time, Nick got too confident and started taking bigger risks. When he started losing money, he made even riskier trades instead of sticking to his plan, hoping to win back what he had lost.

As these bets became out of control, Leeson used fraudulent tactics to hide them. The outcome? An overall loss of £827 million and the downfall of a 233-year-old bank. Leeson’s sad story shows why discipline in trading matters so much.

After understanding the concept of discipline in trading, let’s focus on the important part. The following steps are simple but effective.

maintain discipline in Trading

How to maintain discipline in trading?

Craft Your Treasure Map (Trading Plan): A trading plan is your treasure map. It outlines your goals (the treasure), your risk tolerance (the dangers along the way), and your strategies for buying and selling (the path to the treasure). This map can help you stay disciplined in trading by guiding your journey.

Stay on the Path (Stick to Your Plan): Once you have your treasure map, the key is to follow it! Even if the journey gets tough, stick to your path. Discipline means following your plan even when the market seems to be going against you. Remember, the treasure lies at the end of the path, not on the route we take.

Beware of the Dangers (Manage Your Risks): Never gamble more than you can afford to lose. Always predetermine the maximum amount you’re willing to risk on a single trade. This can be a fixed amount or a percentage of your total trading capital. Always decide the maximum amount you’re willing to risk in your quest for a good trading opportunity ahead of time.

Don’t Get Distracted (Keep Your Emotions in Check): Trading is not about chasing shiny objects. It’s about following your map (trade plan). Don’t let fear or greed pull you off your path. Impulse decisions led by fear or greed often lead to losses. Discipline involves maintaining emotional neutrality and not allowing fear, greed, or other emotions to influence your trading decisions.

Update Your Map (Review Your Plan): No treasure map is perfectly accurate. A disciplined trader knows that constant learning and improvement are part of the journey. Regularly review your trades, identify any mistakes or successful strategies, and refine your trading plan accordingly.

Be a Fit Adventurer (Maintain a Healthy Lifestyle): The journey to trading success is a marathon, not a sprint. Keeping yourself healthy can help you stay focused, make better decisions, and reach your treasure.

To sum up, trading discipline is all about staying on track and not letting emotions cloud your judgement. It’s not always easy to do, but it’s worth it. It may not be as exciting as chasing shiny objects, but it’s the reliable compass that guides you to real, lasting success.

Remember, everyone starts their trading journey as a beginner and makes mistakes. The ones who find the treasure aren’t those who run fastest or shine brightest but those who stay on course, follow their map (trading plan) and trust the Power of discipline. That’s the secret to trading success.

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About the Author

Divesh Jotwani is a Full-time trader in the Indian stock market. He has spent over 20+ years researching and discovering WD Gann's methods and applying them day in and out markets.