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A Successful Day Trader Needs Discipline

Before we examine the psychological and behavioral issues that limit success in day trading, let's examine the qualities that facilitate or enhance day-trading results. The first among these is discipline. Certainly by now you've heard the word discipline hundreds if not thousands of times. It is probably one of the most worn out terms in all futures trading. The problem is that merely saying the word is one thing; understanding its true definition operationally or on a behavioral level is far more important.

You can see, therefore, that discipline consists of many different things. Discipline is not any one particular skill. Perhaps the best way to understand trading discipline is to examine some of its component behaviors. Let's look at a few of these.

Persistence

This is, perhaps, the single most important of all qualities that a trader can possess. Day trading, and for that matter all futures trading, is an endeavor that requires the ability to continue trading even when results have not been good. Because of the nature of markets and trading systems, bad times are frequently followed by good times, and good times are frequently followed by bad. Some of a trader's greatest successes will occur following a string of losses. This is why it is extremely important for traders to be persistent in applying their trading methods and to continue using them for a reasonable period.

Those who quit too soon will not be in the markets when their systems begin to work; those who quit too late will run out of trading capital. Therefore, while persistence is important, it is also important to know when a trader has been too patient when it is time to quit and not play any longer using the system that you have been using.

If persistence is so important, then how does the trader develop it? The answer is simple, but the implementation is not. Persistence is developed by being persistent. Although this may sound to you like a circular answer, it is truly not. The only way to be persistent is to force yourself initially to do everything that must be done according to the dictates of your systems or method. Try this, if you're having difficulty: Make a commitment to a trading system or method. Follow through with that approach for a specific amount of time, taking every trade according to the rules or, if the system is subjective, attempting to trade the system with as much consistency as possible.

If you have been consistent in applying your rules, then you will find that, in most cases, your consistency will have paid off, and you will have profits to show for your efforts. Even if youi trading was not successful, you will have learned a great deal. You will have learned that you can follow a system or method, thai you can trade in a disciplined fashion, and, moreover, that the only way to do so is to be persistent by following as many of the trades and rules as possible.

Compare this to the ignorance and confusion that comes from haphazard trading or by applying trading rules inconsistently Think back to your experiences as a trader. Remember your worsl losing trades. You will find that those losses that have been taken according to a system or method are easier to accept psychologically, whereas those that have not been accepted according to the rules have often turned into terrible monsters, ultimately costing you much, much more than they should have, financially as well as psychologically. If you would like to master the skill of persistence, then you will need to practice it. Make the commitment and I think you will see some wonderful results, even over the short term.