An Exercise In Discipline
The Oxford English Dictionary defines discipline as the practise of training people to obey rules or a code of behaviour. Trading successfully is all about obeying rules (following a trading plan), and the reason most struggling traders fail to make consistent profits is because they lack the discipline that the occupation requires.
What trader hasn’t exited early because they thought “it’s not going any higher”, or has failed to take a stop because they thought “it might come back”? Having a solid trading system or strategy is one thing, but having the discipline to trade it and stick to it day in day out is what separates the winning trader from the losing one.
I’d like to share with you then, a simple but incredibly powerful method for improving ones discipline, by increasing ones will power; discipline is after all, nothing more than an application of will power. To increase will power requires that it is regularly exercised. Just like any muscle in the body, the will becomes stronger the more you use it. How do you exercise your will? By starting with a small task that requires will power to accomplish, and working up from there.
The method then, is remarkably simple; first pick a minor habit that you have. The habit can be anything at all, but start small – don’t choose “smoking” yet - but pick something almost inconsequential; perhaps you always sit in the seat on the bus or train, or always take lunch at a particular time. If you can’t think of anything, ask people who spend time with you, colleagues or family, they’ll be able to list more things you do than you probably want to know about! Now, resolve to change that habit – tell yourself from now on you will sit in a different seat, or read a different newspaper, and stick doggedly to this resolution. If the habit is minor enough, it will be easy.
When you believe you have successfully changed the habit, pick another one, but something more difficult to change, and preferably a bad habit, i.e. something that you will benefit from by changing it, and again, resolve to make that change. This time round you may require more effort to stick to your resolution. At this point, you should make a mental “link” between the resolution in hand, and your ability as a trader. Remind yourself that by conquering this bad habit, you are becoming a stronger person, which in turn means a more disciplined and more profitable trader. Every time you find that you need to use will power to break the habit, remind yourself of this link between your will and your ability as a trader. If your desire to succeed at trading is strong enough, it will help you to overcome the habit, and this in turn will strengthen your will power. Keep at this, and when you break the habit, pick another one, a harder one. By exercising in gradual steps in this way, you will rapidly increase your will power with each new conquest, and discipline in trading will naturally follow in tandem.
In the past when I’ve introduced this idea to some of my students they have looked at me like I’m quite insane. However after trying it for themselves they are always quick to see the benefits. Not only do they become much more disciplined as traders, but they rapidly eradicate all sorts of damaging bad habits as a bonus!
Harvey can be contacted via his website, where you can also read about his day trading course