Successful Disciplined Trading

Successful day trading and swing trading requires the trader to maintain discipline at all times, no matter what. Without discipline, a trader lacks control and a lack of control means poor and inefficient trade management. Poor and inefficient trade management means more losses, bigger losses, forced investment positions and smaller profits. When a trader is not in control of their emotions, they make rash decisions and more frequent than not, they make stupid trading decisions. Disciplined trading consists of knowing what your stops will be, before you enter a trade – that’s right, when you *think* about taking a position, before you enter that position, you already know ahead of time what you are willing to lose on that position, if it turns against you.

Successful disciplined trading means that you know you will take losses while day trading or swing trading and, you are prepared to take a pre-determined loss, before the loss occurs. Success at trading means you set a specific amount you are prepared to lose on any one given trade or position you plan to enter (even before you place an order) in order to limit and attempt to control your loss. Without a disciplined stop loss strategy your losses could be astronomical and not only could you force yourself to become an investor in a stock, futures contract or forex currency, you could push yourself right out of the trading game by locking up your trading capital by making stupid trading decisions. Don’t get me wrong, there may be times when the market moves in such an erratic manner that you are unable to exit your position at your specified stop loss HOWEVER; the disciplined and wise day trader or swing trader knows that, even if market conditions prevent their exit at their specific stop loss, they retain their trade discipline by exiting as close to their stop loss as possible.

The worst and dumbest decision any day trader or swing trader can make is not exiting a position when it turns against them, even if they have to take a larger loss than anticipated, due to overwhelming market conditions. Watching a loss grow, in leaps and bounds due to poor trade management and lack of disciplined trading can erase a trading career, in one trade.

Wise traders will focus on disciplined trading in demo mode, as if their life depended on their trading success. These same smart traders realize that one trade can make or break any trader. The sooner a trader realizes this, the better and if a trader cannot get this to sink into their brains, we hope it happens while in demo mode before they risk one single red cent.

Disciplined trading also consists of trade management when it comes to taking profits. Setting profit goals on a per trade, per day or per week basis is vital to successful trading. Day traders and swing traders need to view trading as a job. When you have a job, you make $X per hour or per day, same should be viewed while trading. Day trading and swing trading are serious professions – you can be a success or a failure. Trading is not for everyone and first things first…if you are unable to discipline yourself, get out of trading before you blow your trading capital.

January 2011