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futures traders

All futures traders must be consistent, efficient, adaptable, and persistent. These are the most important qualities that a futures trader can develop. However, because day trading is unique among the many different avenues that are open to traders, day trading has its special brand of psychology. Some of the systems, methods, and indicators I will discuss in this book have their unique caveats and considerations.

Please take notes carefully as you read this book. From time to time I will suggest specific methods that you may use to overcome your limitations and to maximize your strong points as a day trader. These are not necessarily listed in any one chapter or location in the book. They are scattered throughout.

The Importance of Self-Discipline

Chapter 15 discusses the psychological and behavioral issues that limit success in futures trading; however, before you begin to study the systems and methods I have developed, you will need a general overview of the qualities that facilitate or enhance profitable trading. 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 effete terms in all of futures trading. The problem is that merely saying the word is one thing; understanding its true definition operationally or on a behavioral level is a far more important thing.

What Do I Mean by Discipline?

Discipline is

ж Not merely the ability to develop a trading plan and to stay with it, it is also the ability to know when your trading plan is not working and, therefore, knowing when to abandon it.

ж The ability to give your futures trading positions sufficient time to work in your favor, or for that matter, sufficient time to work against you.

ж The ability to trade again once you've taken a loss or a series of losses.

ж The ability to ignore extraneous information and to avoid inputs that are not related to the system you are using.

ж The ability to maintain reasonable position size and to avoid the emotion that leads to overtrading.

ж The persistence required to maintain your trading system and to calculate the necessary timing indicators consistently, either manually or by computer.

ж Above all, however, discipline is the ability to come back to the trading arena every day, regardless of whether you have won, lost, or broken even the day before.

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