Thursday, April 23, 2015

Discipline


Discipline is an absolute requirement for successful trading. Trading has a multitude of components that have to be managed when identifying opportunities and assessing risk, for example; technical analysis, fundamental outlook and economic reports, geopolitical environment, equity management, emotions, probability, etc. Each of these components requires its own discipline and you must comprehend the weight of its value in any given circumstance and how it may have influence on a possible trade.
Discipline is not a human characteristic that can be adapted overnight. Discipline is a quality characteristic that must be developed over a period of time and refined through experiences, hard lessons and a determined focus on a specific objective.
Discipline is a battle between the human flesh and knowing in your mind what is right and good. Let’s take the everyday life of a human being, for example; it is a known fact

that refined sugar is very harmful to ones health. We know that refined sugar consumed over a lengthy period of time can cause a long list of physical health problems. Most human beings will consume large amounts of sugar in a lifetime, because it satisfies the flesh here and now! People will not even consider the long-term health effects when they are sloshing back that banana split. Yet, after 30 years, the lack of discipline begins to take its toll and a host of health problems begin to show themselves, as they get older.
When human beings come face to face with a life or death health concern, the first thing they will do is ask why this is happening to them. People will look in all directions for a solution and deny or discount that their personal eating habits are the root of the problem. Then the doctor will tell them they have to change their habits and employ some discipline where the problem is concerned. This is a major, almost unacceptable, adjustment for most people if they are not accustomed to a discipline of this manner.
Successful traders know this process very well, because they have taken hold of the ability to discipline themselves accordingly. However, every successful trader has been through the process of being disciplined by the market and has learned from it. Every successful trader has been slapped, beaten, bruised and had their butt handed to them before becoming consistently profitable as a result of learning how to be disciplined.
I believe that my personal adjustment period to trading profitably may have been somewhat shorter than other traders. I was raised in a family environment that required and practiced discipline, as well as lessons on the value of money. In addition, I competed on two national sport teams, participated in four Olympic Games and carried a team from being one of the worst teams in the world to becoming Overall World Cup Champions. To endure and succeed, this process forcibly requires the development and consistent employment of discipline. Any alternative approach would result in defeat.
Many traders enter the market like a gunslinger trying to pick off every empty beer can in sight. The majority of novice traders are undisciplined, without a clear plan and under the emotional influence of greed while looking for a home run trade. When a novice trader decides to enter the “game,” they will be confronted with the realities of trading and likely experience some loss of equity at onset. At this point, when their grandiose plans of getting rich quick begins to appear faint; the novice trader has to make a decision. The fact that they realize they have to make a decision is the first step. It’s kind of like admitting, “I am an alcoholic.” The trader has to admit they have not fully equipped themselves to participate in the market and take a step back to evaluate what needs to be done to participate profitably. Alternatively, a trader will deny that they do not have the necessary skills to trade profitably in the market. This will result in a

continuation of erratic, undisciplined placement of orders and consistent losses to compound the problem they deny they have.
This denial behavior will result in the balance of your account being sucked into the vacuum bag of a savvy trader, while leaving a host of debit transactions in the account summary.






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