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Trading Discipline

  
  Education
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Discipline-TradingYou need emotional discipline or your trading will become erratic. The worst thing that can happen to a trader is that they experience a dose of ‘beginner’s luck’. An enhanced sense of confidence as the result of a few good trades (probably flukes) is a huge threat to your working capital. If you make a good trade – don’t let the adrenaline rush send you headlong into another attempt. Instead, analyse your trade – do you really understand why is went well for you ? If you do – great ! Use this knowledge towards the development of a controlled trading method. If you don’t understand why this trade was a good trade -heave a sigh of relief at your good luck – and recognise it as such.

You need discipline to develope your trading method, to stick to your trading method, to follow the rules of that method and to close down your trading platform if you cannot see a trade.

It bears repeating – if you cannot see a trade close down the trading platform and don’t open it again until the next day’s session.

30 One Liner For Traders -Must Read

  
  Education
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1. Buying a weak stock is like betting on a slow horse. It is retarded.

2. Stocks are only cheap if they are going higher after you buy them

 3. Never trust a person more than the market. People lie, the market does not.

4. Controlling losers is a must; let your winners run out of control.

5. Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.

6. Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.

7. Emotional traders want to give the disciplined their money.

8. Trends have counter trends to shake the weak hands out of the market

. 9. The market is usually efficient and can not be beat. Exploit inefficiencies.

10. To beat the market, you must have an edge. (more…)

Trading Commandments

  
  Education
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Respect the price action but never defer to it. 
Our eyes are valuable tools when trading but if we deferred to the flickering ticks, stocks would be “better” up and “worse” down and that’s a losing proposition. 
Discipline trumps conviction. 
No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always attempt to define your risk and never believe that you’re smarter than the market. 
Opportunities are made up easier than losses. 
It’s not necessary to play every day; it’s only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability. 
Emotion is the enemy when trading. 
Emotional decisions have a way of coming back to haunt you. If you’re personally attached to a position, your decision making process will be flawed. Take a deep breath before risking your hard earned coin. 
Zig when others Zag. 
Sell hope, buy despair and take the other side of emotional disconnects (in the context of controlled risk). If you can’t find the sheep in the herd, chances are that you’re it. 
Adapt your style to the market. 
Different investment approaches are warranted at different junctures and applying the right methodology is half the battle. Identify your time horizon and employ a risk profile that allows the market to work for you. 
Maximize your reward relative to your risk. 
If you’re patient and pick your spots, edges will emerge that provide an advantageous risk/reward profile. Proactive patience is a virtue. 
Perception is reality in the marketplace. 
Identifying the prevalent psychology is a necessary process when trading. It’s not “what is,” it’s what’s perceived to be that dictates supply and demand. 
When unsure, trade “in between.” 
Your risk profile should always be an extension of your thought process. If you’re unsure, trade smaller until you identify your comfort zone. 
Don’t let your bad trades turn into investments. 
Rationalization has no place in trading. If you put a position on for a catalyst and it passes, take the risk off—win, lose or draw. 
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