If as a TRADER you want to have disciplined and profitable trading, The Core Concept you need to Understand is
As a Trader you do not have any control on the market.
Nil Control on Market
You’ve either figured out or you will figure out the fact that not much at all remains under your control as a trader. Dealing with an endless set of variables using a mind that’s geared by nature to defining constants is a tough task. Most of traders focus on Returns and not focusing on the process of trading.
Lets discuss few concept which you need to understand and apply to be more disciplined trader.
The meaning of discipline with respect to trading is rather straight. A trader gets a number of buy and sell side entries in a daytime. A trader has or should have a fixed plan in mind before executing every single trade. This plan includes estimating the entry and the exit price along with a stop loss. Giving way to watch these without any solid reason may prove to be fatal in the long term.
Develop a Trading Strategy
Markets are collective emotional response of 1000 of traders, and as Human Emotions do not change over a period of time and that’s the reason market also goes through the Boom and Bust cycle over a period of time. Be it the fall of May 2006 or the great correction of 2008 or the Rally of 2014/2017. Price patterns occur in all financial markets pretty much the same way they have since financial market inception. Newbies cannot easily see it.
But in time and over time we learn to see = measure the same things over and over and over again with predictable outcomes. Here’s the catch: that predictable outcome is spread across a large number of similar setups averaged together. SO as a trader you need to develop a strategy , get comfortable with it and trade it not looking outcome of few trades.
The trade entry method has to be rigid enough to have some quality control before we’re chasing trades up & down a chart, but relaxed enough to let us enter trades where each one makes technical sense. The trade management method we opt to match with trade entry method has to create trading success. Commitment towards the strategy is the first step to be a disciplined trader.
Trade Signals Do Not Guarantee Profit
One little fact that most traders seem to miss is this: a trade signal per any method or system known to man does not mean price follow thru is assured. Did you ever really stop and think about what a trade signal per any method or system actually is?
A good method, system or approach has three basic (and unrelated) components.
- Trade entry signal.
- Loss protection (initial stop) and
- Trade management (trailed stops and exits away from initial stop) as a complete trade execution approach.
Trade entry signal should be based on some type of criteria (other than impulse feelings or wild guesswork) that determines risk to reward is in your favor and odds of making money are higher. Stop loss is the invalidation point and should be adhered to without hesitation. Many trader fear market will trigger my SL and rally, we need to get over these kind of feeling and just stick to SL.
A trader might receive a good fundamental and technical knowledge and is ready to move in the world of capital markets. But these soft skills like discipline and emotions also play a critical part in a trader’s success and must never be ignored. It will take years to acquire these skills. Once acquired, it will be helpful throughout your life. Disciplined trading will certainly accomplish your goal of a profitable trading.