Success in trading is more than just having the right strategies or tools; it comes from maintaining discipline. Jocko Willink said it best: "discipline equals freedom." Though he was talking about physical training, this applies to trading as well.
Emotions like fear and greed can tempt us to deviate from our plans, but discipline is important for achieving long-term success and avoiding costly mistakes.
I’m sharing seven tips I use to stay disciplined in my trading routine, guiding you towards consistent and profitable trading.
1. Set Clear Goals
Why are you trading? Money is not the reason. Trading for money isn't enough. If your goal is just to make more money, fear and greed will dominate your decisions. Define what the money is for—why do you want financial freedom? Your goal should be a powerful enough “why” that you treat trading as a business, executing your plan without letting emotions drive your decisions.
2. Have a Trading Plan
Please do not confuse a trading plan with a list of strategies. A trading plan is process based. My plan includes steps like logging trades, writing reasons for each trade, and reading orders out loud before hitting send. My plan discusses keeping trading strategies as simple as possible, risk management, and allocation of assets for each strategy. A good trading plan supports your goal of being a profitable trader and helps you stick to your why.
3. Keep a Journal
Tracking every trade is really important. I know it’s time-consuming, but without it, you can't analyze what works and what doesn't. Use a spreadsheet. I have moved to an automated tool called Wingman Tracker to log my trades. I take a lot of trades each week so the cost makes sense to save me hours. Trade logs help you review your performance and make necessary adjustments. You need a spreadsheet to be successful over the long term.
4. Manage Risk
Newer traders are all about the profits, making money clicking buttons is amazing! Focusing solely on profits can lead to disaster. Always have a standard risk amount for every trade.
Keeping your risk small relative to your account size is crucial. Prioritize trades with a high probability of profit and remember, preserving your capital is as important as making money.
5. Stay Informed, but Block Out the Noise
No one knows anything, it’s crazy to say but it’s true. Even if you know for sure what Jay Powell is going to do, you can’t be 100% certain you know how the market will digest the information. Look at earnings events, a company can report great numbers, but the CEO or CFO can mention something about guidance and the stock might drop 15%.
Market opinions are everywhere, but no one knows for sure. Understand market cycles and focus on executing your strategies. Block out the noise and stick to your trading plan.
6. Control Your Emotions
Trading is 85% controlling your emotions and 15% strategy. (I made that statistic up, but I believe it’s true) The fear of losing is everyone’s biggest enemy. Fear and greed lead to poor decisions. Cut losers quickly and avoid holding on, hoping for a rebound. Have a plan for every trade and stick to it, regardless of market conditions.
No one has made a dime panicking. Having knowledge and education, a trading plan, having a written sentence why you took a trade, and having an exit plan before entering a trade is how you control your emotions and make money in the market
7. Use Watchlists, Alerts, & GTC Orders
You don’t need robots, you don’t need to pay someone $20,000 for coaching to make money in the market. Use automated tools to make your trading more passive. Create watchlists, set alerts, and use good-till-canceled (GTC) or one-cancels-the-other (OCO) orders. This approach reduces screen time and helps you stay disciplined.
Make it where you don’t have to be glued to a screen, let the trades come to you through your alerts, and let the broker take some of the temptation away for your stops and profit targets.
These seven steps will help you maintain discipline in your trading routine. Remember, discipline equals freedom. Successful trading isn’t just about making the right trades; it's about maintaining a disciplined approach. Implement these tips, and you'll be well on your way to becoming a more successful and profitable trader.
Happy Trading, Good Kids!
Justin
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