My Discipline Is Being Tested

When I first started trading with Forex I always got attached to my trades that it had a direct impact on my actions and even affected my self-esteem.  Every time I won I felt like a million and seriously believed I finally “got it” and can’t possibly lose again so I went on trying to repeat my victory instantly which resulted in overtrading. When I lost I hated the markets, my broker and everyone else who made money trading. I felt like everybody was secretly conspiring to keep me out of the the circle I have been desperately trying hard to get in to.

“Don’t let your ego get too close to your position, so that if your position gets shot down, your ego doesn’t go with it”. – Colin Powell

It hurt not only my wallet but also my ego. After staying away from trading I started to realize the rookie mistakes I have been doing. I guess it is hard to admit it or even see it when you are in that very situation.  I personally find that unattaching your trades to your ego is the hardest part of trading. Of course we all trade to win. We all want to look good. Why would you ever want losing trades? Yet you are supposed to go all zen and let go of your trades (?) . Seems quite paradox but I am starting to understand the sense behind this – painful as it is.

Last week I almost made a 50% profit on my account and was close to sharing this on my blog and twitter. Luckily, my trading conscience caught this ego trip and advised not to do this because:

  • It was a Friday and it was not time for my weekly snapshot yet which I usually update every Sunday
  • It can go down just as quick so I will only be embarrassing myself. Better stick to the weekly updates.

As I write this post my account is nearing 11% drawdown and I am trying hard to resist the urge of closing my losing trades… I shouldn’t really watch my trades tick away as this drives me nuts, but yet I still do – why? WHHYYY?? Just an hour ago I caught myself thinking: “Come on Market, just get it over with. Stop me out already. Come on.”

I do wonder sometimes if there are traders out there who have become so emotionally immune? One of the top and commonly repeated trading rule is to not trade emotionally. This is also one of the big factors that makes or breaks the trader. In my case, my emotions broke me back when I was trying to “make it” in Forex. I used this as a lesson and decided to eliminate the factor of subjectivity when placing my trades by pinpointing my exact entries and exits up to the very last decimal (of course this requires a trading system that will give you that winning edge over the long-term).

Discipline is a hard skill to practice. But if I couple this with commitment then I might just have found the “keys of the kingdom”. And not just in trading.  . I think on of the keys was to understand the market has no personality and it totally neutral. With that gone you don’t interact with the market as there isn’t one so you can’t get your emotions reflected back.  Or in the words of a friend humans don’t make good traders. My version is that if you are thinking about a trade you are acting like a human and it won’t work so get objective. LOL – you are a mother so treat it like a child with bad behaviour, just don’t allow yourself to connect, be an adult not a parent…

I also firmly believe that you have to take the money out of the equation; this in turn removes emotion and will aid your discipline.  How ironic is it though? We all trade to make money (at least I would assume so) so why take money out of the equation? I guess it is important to focus on your goals and have a real reason for wanting to succeed then it should be easy to discipline yourself. I find that trading rules which have clear entry and exit points help me become more disciplined.

As long as you have a solid pre-determined reason for the trade with entry and exit points (upside and downside), your trading will improve. You have to remember you won’t always be right and staring at your screen for hours on end will not make the markets behave any differently or do your stress levels any good.

I am quite surprised with myself as the way I am trading now is nowhere similar to how I traded 3- 4 years ago. I follow my trading plan and eliminate the noise. Yet my stomach still churns when the price turns red on the charts. Heck, it also churns when the trade goes in my direction. I remember this feeling of having a big knot in my stomach when my first spread betting trade got triggered last week. Of course the price immediately went against my direction (lol) but within a split second, I realized this was the very lesson I need to learn, and I was being tested already. What was I to do? Follow the plan and nothing else.

It’s important to feel good about making trading decisions executed in accordance with my trading plan. The market will reward good and bad actions, but by executing the trading plan there’s confidence of making money over time, providing the system has an edge.

I really feel comfortable with my trading plan. It gives me the confidence and clarity to focus on what I see, not what I think. Yet the emotional side of trading is very intriguing in that it’s not really something that you just “learn” from books and courses. It is a skill that you develop over time. I guess right now for me considering the trading stage I am in, the mere fact that I recognize these emotions is already lot of progress. Yes, I still freak when my trades open regardless of the direction the price is going. I allow these emotions to happen but I do not let them affect my trading behavior.

I guess the next step for me will be to move towards a “letting go” attitude when trading, if only to avoid these horrible stomach knots. They are not enjoyable at all :-/.

Emotion and lack of discipline are the mortal enemies of traders! Conquer these and you’ll go far.

by Spreadbetchick

“Commitment is doing the thing you said you were going to do, long after the mood you said it in has left you.” – Darren Hardy

 

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