{"id":542,"date":"2020-02-24T07:18:10","date_gmt":"2020-02-24T07:18:10","guid":{"rendered":"http:\/\/thetraderinyou.com\/test\/?p=542"},"modified":"2024-01-23T17:59:57","modified_gmt":"2024-01-23T14:59:57","slug":"become-a-disciplined-trader","status":"publish","type":"post","link":"https:\/\/thetraderinyou.com\/test\/become-a-disciplined-trader\/","title":{"rendered":"Learn how to become a disciplined trader \u2013 the secret to making money trading stocks or forex."},"content":{"rendered":"\n
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No discipline seems\npleasant at the time, but painful. Later on, however, it produces a harvest of\nrighteousness and peace for those who have been trained by it<\/em>. Hebrews\n12:11 NIV.<\/p>\n\n\n\n

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If you want to make a living off trading forex or stocks,\nyou\u2019ve got to learn how to become a disciplined trader. There\u2019s just no way\naround it.<\/p>\n\n\n\n

Most traders hop from system to system and broker to broker<\/a>, looking for that one Holy Grail that will make them money effortlessly. I don’t blame them; trading seminars, forums, and leisurely conversations with buddies are all convoluted with systems, strategies, and all the fancy technical aspects of trading.<\/p>\n\n\n\n

As traders, we often forget that the market guarantees one\nthing, the best system and strategy in the hands of an undisciplined trader\nends one way, in huge loss.<\/p>\n\n\n\n

It is then fair to state that a system plays a small role in\nmaking one a successful trader.   <\/p>\n\n\n\n

Don’t get me wrong. A system is essential if you want to\nbecome a disciplined trader. We shall get to that later.<\/p>\n\n\n\n

But, what we know is a system generates trades that have a\nsplit probability of a win or a loss\u2014implying that every system or strategy has\na 50% chance of making money and a 50% chance of losing money.<\/p>\n\n\n\n

If every system has an equal likelihood of making or losing money, then what one thing tips the odds in your favor? Discipline.<\/p>\n\n\n\n

That’s why I prefer that we don’t focus on finding the Holy Grail strategy; instead, learn and understand the psychological makeup and workings of the mind.\u00a0 <\/p>\n\n\n\n

Only then can we dare the self-destructive and sabotaging demons of habits that make trading a nightmare\u2014a guaranteed affirmation of the statistics that 95% of retail traders lose eventually.<\/p>\n\n\n\n

My desire in this article is to remind you and hopefully\nshow you a thing or two that you can master the trader in you<\/a> and become a\ndisciplined trader.<\/p>\n\n\n\n\n\n

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Here we go. <\/p>\n\n\n\n

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What is trading discipline?<\/strong><\/h2>\n\n\n\n
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One evening an old Cherokee told his grandson about a battle\nthat goes on inside people.<\/p>\n\n\n\n

He said, \u201cMy son, the battle is between two \u201cwolves\u201d inside\neach of us.<\/p>\n\n\n\n

One is Evil.<\/p>\n\n\n\n

It is anger, envy, jealousy, sorrow, regret, greed,\narrogance, self-pity, guilt, resentment, inferiority, lies, false pride,\nsuperiority, and ego.<\/p>\n\n\n\n

The other is Good.<\/p>\n\n\n\n

It is joy, peace, love, hope, serenity, humility, kindness,\nbenevolence, empathy, generosity, truth, compassion, and faith.<\/p>\n\n\n\n

The grandson thought about it for a minute and then asked\nhis grandfather, \u201cWhich wolf wins?\u201d<\/p>\n\n\n\n

The old Cherokee simply replied, \u201cThe one you feed.\u201d<\/p>\n\n\n\n

—<\/p>\n\n\n\n

The dictionary definition of discipline – the verb – is to train\noneself to do something in a controlled and habitual way.<\/p>\n\n\n\n

In trading, we aspire to open habitually and close trades when our trading plan says so without fear or hesitation. <\/p>\n\n\n\n

In other words, trading discipline is, training oneself to\ndo what needs to be done, when it needs to be done, and how it needs to be done\nand must I add all the time. <\/p>\n\n\n\n

It’s that simple, yet in the simplicity, a trader often\nstruggles to close a trade when the charts say so, even when a voice in their\nhead is screaming, JOSHUAAAAA, get the fuck out. <\/p>\n\n\n\n

That\u2019s the raging battle of two wolves in the head of each trader. <\/p>\n\n\n\n

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Why do most traders lack discipline?<\/strong><\/h2>\n\n\n\n
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If discipline is the quarterback of a successful trader, why are most traders undisciplined?<\/p>\n\n\n\n

I believe it is because, as traders, we have not understood and accepted the truth about how the market actually works.<\/p>\n\n\n\n

We find the truth so simple, so we seek a complicated answer to our trading problems or to extract money from the markets.<\/p>\n\n\n\n

For every trade you make, you have an equal chance of making a profit or a loss-it\u2019s 50:50.<\/p>\n\n\n\n

For every losing trade, there is a chance that the losing trade can turn into a positive. That applies to a winning trade, too.<\/p>\n\n\n\n

So, most traders who fear loss are hell-bent on the one side of trading, the losing trade, which has a fair chance to return, make us money, and stroke our ego.<\/p>\n\n\n\n

So, what does an undisciplined trader do? He breaks the rules, hoping that this one time, the market will favor him.<\/p>\n\n\n\n

I have blown one trading account after another, all the while knowing this truth, yet I do it again and again like a turkey that would never learn the way back to its nest again and again.<\/p>\n\n\n\n

What you are unconsciously doing is feeding the evil wolf fighting against restraint, eventually your equity curve shows.<\/p>\n\n\n\n

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How do you become a disciplined trader?<\/strong><\/h2>\n\n\n\n
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By feeding the good wolf within you.<\/p>\n\n\n\n

You become a disciplined trader by religiously following the\nrules of your strategy.<\/p>\n\n\n\n

 That sounds so\nsimple, doesn\u2019t it?<\/p>\n\n\n\n

I want to think the actual act of trading is simple.\nCertainly, even a 3rd<\/sup>-grade kid can click the buy and sell buttons\non a trading platform.<\/p>\n\n\n\n

That\u2019s how simple, I think, trading is.<\/p>\n\n\n\n

But of course, being able to click the buy and sell buttons\ndoesn\u2019t make one a successful trader. <\/p>\n\n\n\n

The market is so erratic that it won\u2019t give you money at the\nexecution of a button.<\/p>\n\n\n\n

You need a strategy, a system, and a set of rules to work\nthat system to make money from the trading.<\/p>\n\n\n\n

If you don’t have a clearly defined strategy, then you can\nnever be a disciplined trader. How would you be disciplined in any way?<\/p>\n\n\n\n

You can’t claim to be a disciplined trader or dream of\nsiphoning money from the markets by jumping in and out of trades based on tips\nand hunches or the sheer pursuit of thrill. Eventually, that ends one way.<\/p>\n\n\n\n

If you have a strategy but struggle to adhere to the rules\nof the system, then you have an underlying problem. You don\u2019t trust your system\nenough to follow its rules. So every time you break a rule, you are\nunconsciously massaging and helping your system. <\/p>\n\n\n\n

Eventually, the wolf you feed wins.<\/p>\n\n\n\n

\"Picture<\/a>
Image by Gergely Tichy<\/a> from Pixabay<\/a><\/figcaption><\/figure>\n\n\n\n

So, to become a disciplined trader, you need to:<\/p>\n\n\n\n

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Step one:<\/strong> \u00a0Create a trading strategy or system and a set of rules to trade it.<\/h3>\n\n\n\n
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What we are shooting for here is building our confidence\nthat our trading actions favor us.<\/p>\n\n\n\n

A trading system can only be trusted after it proves itself\nover an extended period of time. <\/p>\n\n\n\n

This requires an investment in studying charts and practice.<\/p>\n\n\n\n

You\u2019ve got to have some screen time learning patterns.\nEventually, some patterns pop out.<\/p>\n\n\n\n

Your strategy is born from repeated patterns in your charts.<\/p>\n\n\n\n

You then define the conditions or rules of what to do when you see them – your trading plan and rules.<\/p>\n\n\n\n

Once you are confident your strategy gives you an edge, you will have no trouble following your rules because you know from empirical evidence that, over time, you will make money. <\/p>\n\n\n\n

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Step two.<\/strong> Trade. Follow the rules.<\/h3>\n\n\n\n
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If you consider the 20\/80 Pareto maxima, then a trading\nsystem or strategy accounts for 20% of your trading success. The remaining 80%\nis the discipline to follow the rules of the system.   <\/p>\n\n\n\n

The disciple should follow the rules scribbled in your trading plan by showing up each trading day to do what traders do: trade.<\/p>\n\n\n\n

A disciplined trader works within the confines of their\ntrading strategy, meticulously, painstakingly, and religiously following their\nplan like traffic lights.<\/p>\n\n\n\n

If you can achieve this subject level and obedience to your plan, you will unconsciously stop going through the motions of the indisciplined trader. Motions Like.<\/p>\n\n\n\n