TRAITS OF A DISCIPLINED TRADER
Good Evening ,
In this article I will share those guidelines which will help to you scale up as a trader. Always remember major learning comes from your failure and these guidelines are none but learnt hard way from failures. So let’s take a deep dive into the same.
1. NEVER COMPARE YOURSELF WITH OTHERS:
In this age of social media especially TWITTER and INSTAGRAM you must have seen those FLASHY POST showing MILLIONS made in single trade and trust me when you will come across such post your mind will also get diverted towards that and you will also start thinking that you will also do the same on the next trading day itself but this is not the way it happens. Even I have also gone through the same and I also tried to imitate the same but what I have made is loss and sometimes major loss. Always remember everyone has their own clock so don’t try to run ahead just follow the process you are following and trust me success in trading will come, it’s just the matter of apt PRACTICE, DEVOTION AND DEDICATION. Never get distracted by such flashy posts always try to follow your process and methodology. “FALL IN LOVE WITH PROCESS, RESULTS WILL FOLLOW”
2. NEVER SCRAP YOUR MAIN TECHNIQUES:
There will be time when you will see that series of 4–5 trades are going in loss and at moment you will see that your heart and brain will say one thing “CHANGE THE TECHNIQUES” and trust me you will do the same, the method which you were following you will scrap out and start learning or adapting something new and then again there will be series of 4–5 trades that will be going in loss and again you will search for some new technique and you will certainly fall in the vicious circle of “LOSS — FLIP — LOSS”. Instead of doing this just follow or master one technique and if required make some healthy tweaks but never scrap your main methodology that you have been following since long time.
3. NEVER TRADE WHEN YOU ARE EMOTIONALLY WEAK:
Life is very uncertain and you don’t know what will happen tomorrow. There will be days when you have not slept aptly, when you are facing mental stress, when you are feeling negative vibes. On those days you have to just avoid trading and come back after a break may be 1–2 days with freshness and rebuilt positive energy, try this you will see a major change in your strike rate of winning trades.
4. STAY AWAY WHENEVER IN DOUBT:
There will be stocks, chart patterns, price formations which will look little bit confusing simply in such cases just AVOID those stocks and move on to next findings. Never force a trade. You should know which ball to leave and which ball to play, the day you will be able to differentiate between these two you will see that you are taking quality trades.
5. WORK SMART:
In this fraternity there are many who try to churn out 100s of charts on SATURDAY — SUNDAY. See what I understand is research in relation to trades and trading has to be done with fresh mind. You are already exhausted seeing the charts from MONDAY — FRIDAY then you are trying to figure out good charts on SATURDAY — SUNDAY. This will not take you anywhere it will just make you feel complacent that you are putting efforts but that’s not the real case. Rather I would suggest FRIDAY evening onwards till SUNDAY afternoon just have good chilling time with your family, friends. Read some good books (because value addition in this field is must. Always be thirsty to gain knowledge and do it on SATURDAY — SUNDAY). Then after SUNDAY afternoon you can start analysing charts. Try it you will see the difference and literally you feel that your quality of analysis has improved a lot.
6. NO REGRETS PLEASE:
There will be situations where you will find out that a stock which you were analysing and tracking and were ready to take positions has suddenly got out of sight and then when you check it one fine day you will see that stock has moved exactly in the way you expected but the sad part is you didn’t take positions and you will be left with nothing but loads of regret and understand this is very common. Rather than having that sense of regret concentrate on finding next best quality trade because that feeling of regret will take you no where and will add to your problems.
7. JOURNALISE YOUR TRADES:
The biggest mistake which majority traders do is they never take journalising seriously. Understand that its your journal which will help you to give a deeper insights about your trades. What most of us do is we only journalise only PROFITABLE trades and never make an attempt to journalise LOSING trades and really it’s very hard to journalise LOSING trades because we always want to be WINNERS in our eyes and we don’t want to LOSE any day, just throw away this thought process. Be ready to LOSE, but always learn from those LOSING trades and try to ensure that if same situation arises next time you should avoid doing that same mistake. “MISTAKES ARE PART & PARCEL OF LIFE BUT DOING THE SAME MISTAKE IS NOT ACCEPTABLE”
8. RESPECT YOUR STOPLOSS:
Normally when I see many new traders they feel bad when their SL gets hit but if you see the thought process of any professional trader they literally think differently because for them it’s like “चालो सस्ते में निकल गया”, they have one clear mindset if they would have carried on with the same losing trade even beyond the SL level then the loss would have been much more wider rather they were able to come out will small loss. So never take your SL too negatively its part and parcel of trading. Respect it, Accept it and follow it diligently without any deviation
9. ALWAYS DECIDE YOUR POSITION SIZE UPFRONT:
Treat trading like a business and not like an adventure activity. Always ensure that you go prepared i.e. once you have decided your trade either LONG or SHORT then also decide your RISK PER TRADE and then accordingly decide your POSITION SIZE based on the following example
Not only it will help you keep your losses under control but will also ensure that your are not freaked out when the stock starts moving opposite than your view which is more important
10. DO YOUR HOMEWORK:
Majority of traders fail because they are not ready to do homework i.e. they just go into live markets and pick up random stocks and trade without any position sizing and trust me if you will do this you will certainly see that your capital is eroded in few number of trades, rather go in with a systematic approach
a. Make your watchlist (which I generally do on SUNDAY)
b. Analyse all the stocks which are under the watchlist
c. Decide Entry — Stoploss — Target
d. Also decide your Position Size
Preparation is must, if you are unprepared and you feel that you have not done your homework aptly simply avoid trading the next day
11. EVALUATE YOUR PERFORMANCE:
This is must if you want to see yourself as a successful trader. Instead of measuring your performance in a single trade try to measure your performance over a series of trades. Normally its better to evaluate yourself over a series of 100 trades but if you feel that 100 trades will take time then do it in parts i.e. evaluate your performance of first 40 trades then evaluate for next 30 trades and then for balance 30 trades. Everything you can evaluate but the most important aspect which you should not forget is to check that the mistakes that you made in first 40 trades are not repeated in next 30 trades because if you are committing the same mistake again and again then you need some serious change in mindset to overcome that.
12. TAKE A BREAK FROM TRADING:
Its must to know that when to stop trading, see the plan should be very simple when you are seeing that you are having good week and all the trades are in profits from MONDAY to THURSDAY simply take a break from trading, come back leaving all those self-proud factor aside with a factory reset.
Now for losing side, if your 3 trades are going in loss then ensure that when you take 4th and 5th trade reduce the position size to the minimalist and if you see that you are still making loss then simply go back to the blank canvas re-read all the concepts, methods and then try to figure out which mistakes you were making then once you have gained confidence that you are ready to trade start with pilot (small) positions and then once you see yourself improving then again go full-fledged
You must have heard hue and cry about ‘DISCIPLINE IN TRADING’ in my perspective if you are following the above mentioned aspects you are a DISCIPLINED TRADER
Happy Journey,
With Regards,
Siddharth
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