Over the last 10 years I have been interacting with thousands of retail clients and a common thing I have heard is that no one makes money in the markets.
This is a problem especially for the retail traders groups who don’t have any access to professional traders.
Maintaining self-control and discipline is one of the most essential skills required for financial success.
“Every One must Choose one of two Points:
The pain of Discipline or the pain of regret – Jim Rohn “
Self-control is easy when we are not facing stressful situations and dealing with fight-or-flight responses.
There are many ways that traders, especially novice traders, can lose self-control.
They may abandon a trading plan prematurely or take profits too early, for example. Trading takes patience, a trait that many traders don’t have. The most disciplined people tend to avoid risk and are unlikely to get into the trading business. People who are attracted to trading, in contrast, are often independent minded rule breakers. They are drawn to the potential thrills that trading can provide. They may like the action, but many have difficulty maintaining discipline. If you have trouble maintaining discipline, you might want to think about developing this skill.
Just as you would do physical conditioning to prepare for a marathon, one of the “muscles” a trader needs to tone is the ability to maintain discipline. It may seem easy to maintain discipline, but when it comes down to actually maintaining discipline during the tense moments of the trading day, some traders balk. During a trade, they are under a tremendous amount of pressure. They often panic and abandon the plan or make trading errors.
Today’s self-control methods are illustrated by reader Gus Joury, a short-term trader of crude oil futures. Here are some of the daily practices that aid his trading:
“1. I start my day with 15-20 minutes of meditation/mindfulness. I practice breathing meditation and or TM to clear my mind and keep me focused and aware of my emotions before I start trading. During this time, I use the inner balance app with a heart rate variability monitor to measure my performance for that session and I record my score.
2. I go over my checklist to make sure I had a good night’s sleep, protein breakfast, and workout. I also rate my physical condition, distraction level, and overall emotional and mental state for trading.
3. Before I start trading, I look at market conditions and rhythms at different time frames to try to evaluate whether the market is tredable, whether it is trending or choppy, etc. This helps me decide which tools and setups to use and whether it is worth trading or not.
4. I start my first trade with small size (1-2 contracts) to test the waters and see if I am in tune with the market and to get a feel for the overall market environment.
5. Once I start with a winning trade, I start increasing my size in the following trade by adding to the winners. I like to start small and if the market goes in my direction, I add to my position using buy/sell stops and then scale out at the first target and second target and then trail my last position with one tick below/above the previous bar low/high to maximize my profits in the trade after having pocketed earlier profits. This strategy makes me less anxious to take profits and helps me hold my position longer with a trailing stop. It gives me good risk management and allows my winners to be much larger than losers.
6. During my trade, if I experience any anxiety or discomfort, I take deep breaths in and out in order to maintain my focus and stick to my plan.
7. After closing my trade, if I feel any anxiety, regret, or discomfort, I take a breathing session break for 5-15 minutes until I clear my mind and refocus. I also do some EFT tapping (emotional freedom techniques) with breathing to release negative energy. I sometimes take a break by walking out of the trading office.
8. Once I hit my daily stop loss, I stop trading. I also stop trading if I lose 50-75% of intraday profits.”
2nd most important Part of Trading for Living is Money Management
Money management is an essential part of self management in trading. will post soon on this topic