This post was inspired by an email I received from a struggling trader yesterday. She was asking about what is missing, why she is struggling to find consistency.
Trading can become very emotional. Before the trade, there is fear of entering a position. During the trade there is the fear of risk and the natural drive to take profits after the trade clears break-even. There is also greed, sometimes a winning trade looks too good, so the trader does not want to exit.
How can a trader work towards consistent performance, towards profits? The answer is to be disciplined. Discipline is one of the most important skills to have.
It takes discipline to define a trading plan, and to stick to it. Discipline is required to stick you your best setups, to enter and exit when you should, and to control your risk exposure.
Discipline is key to long-term trading success, to profits, and key to survival. If a trader doesn’t follow rules, trade optimally, then the trader will eventually fail. The next time you make “bad” trades, resolve to be more deliberate, and more disciplined.
It’s not easy! Discipline does not come naturally, it takes repetition to for good habits. Every time you sit down to trade, consider whether you are being disciplined. Review your strategy, confirm that your risk is acceptable, that your trade setups meet your requirements, that you are not exiting or entering trades emotionally.
It takes constant work. No-one is perfect. Every time you fail to trade your plan, stop for a while, focus on discipline.
-Neal “FibMaster” Hughes.