There is no single attribute that defines a trader and there are many skills necessary to become successful. However, the most important skill in trading, in my opinion: is discipline. This one trait will determine your success more than any other. One single session, one day when you lose it and it’s all gone. Blown away. Erased. Cancelled. Fucked. A lack of discipline can lead to huge losses, which will set you back financially and emotionally.
I don’t know about you but I’ve blown away so many accounts: no less than 10 to be honest. For blown away I don’t mean like running them back to zero. More something like: build it slowly, 2-3 weeks of consistency, 10-20% up till one day something happens – you lose a few trades, go into a dark spiral, bet more than you should and back to square one or worse. Been there, done that. Honestly, I still fear that this can happen any moment or any session. But I embrace this fear, it’s this feeling that probably keeps me in check.
By definition discipline means: “the practice of training people to obey rules or a code of behaviour, using punishment to correct disobedience”. Rules… How do we establish rules? How can we self-punish when disobeying them?
Well, there are 3 things that helped me to improve trading discipline:
- solid trading plan
- in-depth journaling
- experience.
The trading plan: it’s the base for every trader out there. It doesn’t matter whatever instrument, asset class or time frame, without a trading plan you’re fucked. Concise and straight forward plan, preferably written in one single page (making it easy to remember), few single rules that define your strategy and risk management. It can be difficult to make trading decisions in a fast-paced environment. Without a plan I think it’s almost impossible to execute properly. I’ll share mine someday in another blog post.
Journaling is no doubt the most annoying duty in trading. Especially when things don’t go too well. But nothing beats journaling in terms of progress. No chance you will improve and stop making the same mistakes without proper journaling. I journal a lot. I have several types of journals: for trades, for behaviours and emotions, for price environment and a simple diary where I note down everyday life events that can influence my trading somehow. Again: this is a huge topic that deserves another blog post itself.
Finally: experience. I’ve read so many books, watched so many videos, listened to so many podcasts but still made all the possible mistakes even though I was warned about them. Trading is like life. It is life indeed. You won’t learn until you fuck things up. Mistakes have the power to turn you into something better than you were before. You can get all the education in this world, but still going through the pain of failure is the most important motivation to improve.
Mistakes have the power to turn you into something better than you were before. You can get all the education in this world, but still going through the pain of failure is the most important motivation to improve.
I’ve noticed in myself, every time I fucked up it was slightly less severe than before, and on and on till at some point you kind of control emotions, you recognise the bad pattern that would lead you to lack of discipline and you become able to correct in time. Maybe walk away from the computer, maybe reduce risk… it’s up to you and your plan.
I’ve promised I’d be short in my posts so I’ll cut this here. I just want to give credits to the people that helped me the most in improving my discipline.
Mark Douglas is the goat for me. I’ve read all his books and watched all his videos. There’s so much free material online. Just google his name and you’ll find hours of videos and probably eBooks too.
Another one is Dr Breet Steenbarger. His books, YT channel and his blog are full of gems. The guy knows a lot about trading psychology and he analyses in depth all the aspects of trading discipline.
Last but not least is Trader Dante. From him I learned the art of journaling. All his prop firm stories and the CWT podcast made me understand how crucial it is to journal and the benefits that are following from it.
