Becoming a more disciplined
trader is very important to trading success. Successful trading is all about
controlling your emotions while trading. While this is much harder done than
said, it is possible if you follow a disciplined routine. One key to a consistent
routine is for it to be practical because if it’s not, you will have a
difficult time following through.
A disciplined routine
consists of the good answers to the following questions:
- What do you
trade?
- When do you trade?
- Where do you trade?
- How do you trade or what rules do you use to trade?
- When do you trade?
- Where do you trade?
- How do you trade or what rules do you use to trade?
If you can answer these
questions with specifics and then you can continue to follow the answers you
have, you will become a more disciplined trader.
What You Trade
There are so many markets that you can trade, such as stocks, futures, forex,
options, etc. I have found that it is better to concentrate on one or two
markets and become very good at those, as opposed to trading several markets at
the same time.
When You Trade
When you trade will largely be a function of when the markets that you trade
are open for trading. Exchange traded markets have specific hours, but forex,
for example, trades 24 hours per day. However, no one can effectively trade all
day and night for very long. So determining the best hours to trade for your
personal routine is very important.
One important key to
deciding on when to trade is what style of trading you like. For example, if
you are planning on trading stocks / ETFs or forex on a longer position basis,
you will need far less time than if you want to actively trade on a shorter
time frame or “scalp” trade the market, which generally requires an exclusive
block of time, at a set time per day, every trading day. So, understanding what
kind of trading style and what markets you are interested in in the long run
will help determine what routine you eventually decide is the best for you.
Where You Trade
It is very important to successful trading that you create and control the
environment that you trade in. I would suggest that you trade in an uncluttered
workspace. An uncluttered workspace will have a tendency to lower your anxiety
and distract you with all kinds of other things. Also, many successful traders
like to have some kind of background music that you like and will put you in a
good positive mood.
How You Trade
In other words, what rules or system do you use for your ‘Trading Plan’? Having
a good trading plan or system, with simple entry and exit rules, is a key to
disciple and controlling your emotions. Once you have a good system with good
entry/exit rules, it is important that you follow or stick to them. Your
trading plan should also include targets and stops so you can set up your
trades using good risk management and you won’t feel the need to adjust your trades
based on fear or greed.
In conclusion, it is
important to have a simple routine that is practical and one that you can write
down and follow consistently. The key is to make it practical and simple enough
that you will follow it, which will help you control your emotions and be far
more disciplined in your trading.
by JIM SCHARMAN on http://www.profitsrun.com