Psychology of Trading: Discipline - How to Develop It?
In continuation of my previous post I would like to share techniques for developing discipline. Again, this is just a skill that can be developed. It is not a personality trait or something you are born with. We all want to be professional and achieve our financial goals, so it's worth making the effort.
Self-discipline is a word used to describe a process of learning how to take conscious control of your actions. It is a specific thought methodology, a mental resource, that allows you to change a belief or belief system when it is in conflict with some goal or objective.
1. The important thing to understand is that how we do something, we do everything. If our brain learns to be disciplined in one thing, it will be easier for it to learn to be disciplined in everything.
An exercise I use to develop discipline that works very well for me.
You have to choose an activity that you don't particularly like to do, that is difficult to do, or an intention to give something up. For example, if you don't like to read, you make a commitment to read 1 hour of trading/investing literature every day. If you're not good at sports, you commit to running for 30 minutes every day. If you drink a lot of coffee, you commit to giving up coffee. These are just examples, it can be any action, the main thing is that it's hard for you to do. And you do it for 100 days, regardless of your mood, desire, conditions, or weather. You don't miss a single day, don't negotiate with yourself. If you missed it, you start again, from day one.
During that time, entirely new neural connections are formed and the brain gets used to being more disciplined in everything, including following your plan and rules in trading. You have more confidence in yourself and your confidence grows.
2. The second exercise is directly related to trading. If you don't keep a journal, make a commitment to keep a trading journal and write down your thoughts for at least 100 days. In my experience, it is very difficult to write down and analyze your failures, rule violations, emotional trades and such if they happen often. You just stop doing such wrong things. A journal is very helpful to follow the rules and act smartly.
"We must all experience two kinds of pain: the pain of discipline and the pain of regret. The difference is that the pain of discipline weighs grams, while the pain of regret weighs tons". (Jim Rohn). From my own experience, I can confirm that this is true )))).
P.S. On the chart is just an example of where I sold USDCAD (in pink) and didn't close the trade at the stop loss. Of course, I lost more than I had planned and then I was journaling the trade and feeling the pain of regret. )))
Good luck and trade safe!
Self-discipline is a word used to describe a process of learning how to take conscious control of your actions. It is a specific thought methodology, a mental resource, that allows you to change a belief or belief system when it is in conflict with some goal or objective.
1. The important thing to understand is that how we do something, we do everything. If our brain learns to be disciplined in one thing, it will be easier for it to learn to be disciplined in everything.
An exercise I use to develop discipline that works very well for me.
You have to choose an activity that you don't particularly like to do, that is difficult to do, or an intention to give something up. For example, if you don't like to read, you make a commitment to read 1 hour of trading/investing literature every day. If you're not good at sports, you commit to running for 30 minutes every day. If you drink a lot of coffee, you commit to giving up coffee. These are just examples, it can be any action, the main thing is that it's hard for you to do. And you do it for 100 days, regardless of your mood, desire, conditions, or weather. You don't miss a single day, don't negotiate with yourself. If you missed it, you start again, from day one.
During that time, entirely new neural connections are formed and the brain gets used to being more disciplined in everything, including following your plan and rules in trading. You have more confidence in yourself and your confidence grows.
2. The second exercise is directly related to trading. If you don't keep a journal, make a commitment to keep a trading journal and write down your thoughts for at least 100 days. In my experience, it is very difficult to write down and analyze your failures, rule violations, emotional trades and such if they happen often. You just stop doing such wrong things. A journal is very helpful to follow the rules and act smartly.
"We must all experience two kinds of pain: the pain of discipline and the pain of regret. The difference is that the pain of discipline weighs grams, while the pain of regret weighs tons". (Jim Rohn). From my own experience, I can confirm that this is true )))).
P.S. On the chart is just an example of where I sold USDCAD (in pink) and didn't close the trade at the stop loss. Of course, I lost more than I had planned and then I was journaling the trade and feeling the pain of regret. )))
Good luck and trade safe!