News & Analysis

Six Steps to Improve Trading Discipline – #1 Awareness

18 September 2019 By Mike Smith



With very rare exceptions every trader must battle with trading discipline at stages in their trading career. Commonly when we explore trading discipline, there is an obvious focus on what we will term “execution discipline”, that is engaging and following through with elements of your trading plan e.g. adhering to a pre-planned exit strategy.

However, becoming a better trader is more than simply doing what you say you will do with direct trading actions. It also involves developing a structured plan for learning trading (fostering improved knowledge and confidence), creating those systems that support the development of that plan you intend to execute, discipline in learning and system development.

Quite simply, discipline in learning gives you the tools to develop and creates effective systems (and measure them) without these, and a subsequent belief and confidence that they could work for you when trading, it becomes significantly more difficult to be disciplined in the execution of direct trading actions. So, in reality all these areas are interrelated in terms of potential trading outcomes.

With many traders knowing where to start and what to do to address the challenges of mastering trading discipline is a barrier to moving forward. In a recent ‘Inner Circle’ session (find out more about joining this group here ), we aimed to assist those in this position and outlined a six-step process to facilitate this.

These steps are:
1. Develop awareness and OWN your behaviour.
2. Explore potential cause(s) and prioritise areas for “work”.
3. Create the motivation to consider change through evidence.
4. Action plan and follow-through
5. Lock in the new change
6. Measure and move on to next issue.

This first article in this series focuses on the first of these steps, with subsequent articles addressing the other steps.

Developing awareness of where you are now not only assists in providing a benchmark as to where you are now but allows prioritisation of areas to address that will tighten your trading behaviour.
Additionally, of course, through doing an exercise to develop this awareness, this facilitates some “ownership” of where you are now, i.e. being responsible for what you are doing well, and more importantly what areas need improvement.

This is invaluable as it moves away from the all to common blaming of the markets, or your system for your results. After all, two things are clear and indisputable:
a. You have control and responsibility for all trading actions and hence are completely responsible for the results you get from trading. This includes creation and evaluation of the trading system you are using. Logically, although this fact seems to escape many, you can’t even reasonably begin to “blame” a system for your results until you are following it religiously. As soon as you stray it becomes a “you” issue, rather than a system issue.

b. You are in control of what happens from now. Previous results, and the behaviours that led to these, serve only to give you “feedback” as to what you need to do next, the good news being of course that you CAN, with the ownership of discipline issues, make the changes you need to.

So, with the theoretical justification covered now onto the practical.

To assist in your development of this ‘awareness’, crucial to the subsequent five steps, we have a “15-point discipline checklist” for you to download and complete to give you this opportunity to benchmark and consequently begin to prioritise and work upon.
Although we previously referenced the interrelated nature of the three critical discipline areas – discipline in learning, discipline in systems, and discipline in execution, we have used these three areas as a framework to make identification of those areas that you need to work on, a little easier.

So, your mission is clear for this first step:
a. Download the attached checklist below
b. Complete it and then identify the three areas you think could make the most difference to your trading
c. Watch out for the next article in this series where will give you additional information to move onto step 2.

Discipline checklist amended 3

Ready to start trading?

Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.