Discipline is not like a power button which you can just turn on and turn off like you on and off your mobile phone. Many traders misbelief that when they start their trading they just power on the button of discipline so that they can become a more disciplined trader and follow their rules by avoiding breaking rules and learning from the mistakes they have done before and never repeating the same. But it does not work the way you think.
Becoming a disciplined trader is not that easy. Discipline is like a plant that you need to grow over time. Many traders come and go, but only a few can stay in the race of trading and winning. All traders start with the same but why do only a few of them get successful? – The answer is they develop habits that help them to stay in the race.
Let’s talk briefly about the habits of a disciplined trader that you can follow to become successful.
Every trader enters the market with a clear goal. You must have clear objectives written down on paper so you read them on daily basis. So when you start your day trading, it will help you to make the right decisions.
When you have a clear vision that how much risk you can take against the profit you earn, without a clear objective, you cannot be a successful trader.
First set your Goal and clear your objective in mind.
1. Write a plan and execute
If you don’t have a trading plan written on paper and didn’t execute it, you cannot survive in trading.
A plan includes trading strategies, what you will do if your stop-loss is triggered, how much trade per day you are going to take, what will be your strategy, and how you can survive if your stop-loss hits continuously.
When you have all things clear in mind before you enter it will help you to move one step closer to achieving your goal.
2. Risk Management and position size
Managing your risk with proper knowledge of position size is the most important part of a trader’s journey to becoming successful.
Let’s understand how position size works with an example:
Your capital = 500,000/- ₹
You can afford to take 1% risk of total capital = 5000/-₹
Now you trade the stock worth 500 and your stop loss is 5rs.
Now you can take a 5000 ₹ loss.
So you can easily select quantity by the simple formula which is,
No of shares = your risk / stop loss =5000/5 = 1000 no of shares you can take for the trade.
Position sizing helps to trade without fear as you are clear about the risks involved with every trade.
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3. Accept the loss
Before entering to market you need to prepare yourself for accepting loss. That doesn’t mean that you are looser in the market.
Most of the time when stop loss triggers, traders think that price may get reversed and they can cover the loss and it will turn into a profitable trade.
Always remember one thing, the market doesn’t move as per your predictions, and you have to take action according to the movement of price.
If the price is going against you, it means that you are wrong not the market.
When you start accepting the loss, you will see that you are always on the profitable side.
4. Keep a record of all trades
Do you record your trades? Recording trades include a record of all your trades executed along with notes that includes your mistakes, why you have taken that trade, and which strategy you have used.
This helps you to compare your current trades with the older ones. This habit will help you to learn and improve.
5. Take responsibility for trades
As a trader, you must know the fact that every trade you execute is your decision. Whatever the result, only you are responsible for that.
When you fail, you must ask yourself – Did I follow the rules or trading plan strictly? If the answer is yes then you need to change your strategy but if the answer is no then you need to work hard on yourself.
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6. Trust Yourself
Not in trading, but in any field the very first step is to believe in yourself. Without self-confidence, you cannot achieve success.
No matter how much loss you have done, learning from past trades and mistakes and applying them in present will give you the confidence to go ahead and achieve your financial goal.
7. Take it as a game
When a professional player plays cricket, you know that he has to follow the rules. To win the match he has to practice 1000 times, and he works on his techniques to give the best performance right?
So Trading is the same as a game in which to become a professional you have to work on developing habits, strictly following the rules. These practices will help you to win the match.