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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 which facilitate or enhance day-trading results. The first among these is discipline. Certainly by now you've heard the word discipline hundreds if not thouВэsands 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, but understanding its true definition operationally, or on a behavВэioral level, is a far more important thing. What do I mean by discipline?

Вц Discipline is not just 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.

Вц Discipline is also the ability to give your day-trading positions suffiВэcient time to work in your favor or, for that matter, sufficient time to work against you.

Вц Discipline is the ability to trade again once you've take a loss. It is the ability to ignore extraneous information and to avoid inputs which are not related to the system you are using.

Вц Discipline is the ability to maintain reasonable position size and to avoid the motion which leads to overtrading.

Вц Discipline is the persistence required to maintain your trading sysВэtems and to calculate the necessary timing indicators consistently durВэing the day, either manually or by computer.

Вц 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. Perhaps the best way to understand trading discipline is to examine some of its component behaviors. Let's look at a few of these.