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Day Trading, Discipline, and Persistence

There can be no profit, no success, and no fame unless the trader has first mastered the self-discipline and persistence that are essential ingredients to profitable day trading. These skills are intrinsically intertwined in the psychology of the trader. My experience has taught me that the single most important aspect of any trading method, whether for the long-term, intermediate-term, short-term, or day trade, is the psychology of the trader. Without functional psychological tools, the best trading system in the world will be subject to the whims, fears, and hopes of the trader. The psychologically weak trader will undermine the system, and the result will be loss after loss.

My work with trader psychology dates back to 1968. The years have taught me well. I have learned that unless a trader has mastered his or her psychological ability to apply the rules of a system, no method or indicator will be effective. The lack of self-discipline will eventually take its toll in the form of losses. This will increase the trader's frustration, resulting in less discipline and more losses.

Systems cannot work and will not work unless traders allow them to work. The undisciplined trader will commit a multitude of errors, some conscious and others unconscious, that will undermine success. The errors will be those of omission as well as commission. Having been educated in clinical and behavioral psychology, I am well acquainted with the limitations of the trader and with the psychological roadblocks that traders constantly throw in their own paths.

In fact, I have written extensively on this subject. The Investor's Quotient, originally published in 1980, and The Investor's Quotient-Second Edition, published in 1993, have continued to be best-sellers over the years. Traders the world over have read both books. The many letters and calls I have received in response to the books have confirmed my assertion that without an effective psychological orientation to the markets, a trader is doomed to failure from the start. And this is especially true in day trading, where decisions must be made quickly.

Traders must be willing to realize their limitations, and they must learn and apply strategies to overcome them. While there are those who will disagree with me, I feel strongly that trader psychology is just as important as an effective trading system or method. Without both elements present in the correct measures, success will not come easily, if at all.

While many of you may choose either to ignore what I have said or to sidestep it entirely, I do sincerely believe that to do so would be the worst mistake you could make. Although it is impossible to completely discuss in one brief chapter what takes several books to explain thoroughly, I will do my best to acquaint you with the pitfalls that plague all futures traders, limiting their success.