Discipline has a great impact on investing and life. Trend Traders Network today believe that a person with a lack of discipline is the biggest reason for the high failure rate in his/her trading plan. Being discipline comes in 2 area:
1) Discipline in our trading plan and strategies using trend analysis.
2) Discipline in staying focus and hard working.
We have met people who commonly find it difficult to maintain their portfolio state to be profitable in the long run and they eventually end up giving up or ignoring the whole portfolio. Most of us have been sticking up with the daily routine of work, listening to our bosses and following the policies that company set to us. But eventually when we are suddenly our own boss, at times we can feel lost and confused about what we should be doing for our day to day routine. We should always remember that there is no short cut in life. Every single things in our life comes with discipline that will lead us to our success. To get where we want to be, we must always be ready to sacrifice the pain of discipline rather than the pain of regret.
Follow the trend and reap the profits! When the trend is violated, CUT LOSS!
If every investors can adapt discipline into their trading plan and strategies, they know they are ready to tackle problems that gonna hit them in the near future and there will be more problems to tackle just around the corner! This is just like life, people work hard by focusing into what they should do. When problems arises they will just find solution to solve it. They wouldn’t stay on their mistake and wait for a miracle to happen. Same goes to an investor as well when it comes to applying what you’ve learnt. Treat your investment/trading as a job/business!
A typical scenario of a trader without discipline;
You enter a trade based on feelings/ spontaneous decision that is not part of your trading plan, and the trade starts off in your favour giving you some gains but then suddenly falls below your entry price. But you did not previously enter this trade with a trading plan and did not set your own exit strategy.
You are now in a position of losing money and the only thing you have in your mind is to use your emotions to make your decision. Your mind will be telling you not to take the losses as maybe it will rebound back (hope). But then it drops further more and now you are in a position of either cutting losses or pray for another rebound the next day. But as you realize that there is no longer hope for this trade and with the amount of losses you are having now, you will eventually just marry this trade and keep it as your long term relationship and still hopping one day it will go all the way back up to your entry price.
This is a common mistake that every investor/trader will make in their journey. We know how to spot for an uptrend formation, ride on it and make profits out of it. But most of us do not know when a particular trend is violated due to some factors, we have to discipline our self by setting our own exit strategy (cut loss point) on each of our trade to protect our capital and minimize our losses at least. This is the cycle we have to go through to understand and learn how to make a wise decision in our investment but it is also the hardest financial lesson that you will ever learn. It is how you cope with and deal with in order to make you a successful trader/investor! No doubt that DISCIPLINE is the most important factor that needs to be conquered in order to survive in the markets and in everything in life!