Discipline in Trading: Don’t let the Emotions Flow!

August 25, 2014 Stock Trading Tips 3 min read
Discipline in Trading: Don't let the Emotions Flow!

There are many skills required to be a successful trader. In addition to possessing the fundamental know-how about the capital markets and various technical aspects used in trading, maintaining discipline is a very important trait that every trader must give birth. We all have discovered accounts of traders losing millions by not maintaining discipline or by becoming excited. Such cases have led to increased focus on this particular skill among the trader’s world.

Stock trader should know the discipline in trading

Meaning of Discipline in trading

The meaning of discipline with respect to trading is rather straight. A trader gets a number of buy and sell side entries in a daytime. A trader has or should have a fixed plan in mind before executing every single trade. This plan includes estimating the entry and the exit price along with a stop loss. Giving way to watch these without any solid reason may prove to be fatal in the long term.

Lets get to the Maths            

For example, suppose a trader plans to buy a stock at the price of 100 with a target of 103 and a stop loss of 98.5. If he gets filled at 100 and market in a while comes down to 98.5, he should exit the trade without a second thought if there is no substantial grounds to support that. If a trader holds it for some time with a blind hope of prices going back to 100 or 103, he is not sticking to the plan and the stock price may fall to 96 because of the reasons a trader is not cognizant of. Hence in such a case, a trader is losing more than what he planned to clear from that trade, which will affect rest of his trading. The price may go back to 100 or 103 but such type to trading will not be helpful in the long term.

The Correlation between Greed and Hope

Likewise, greed accompanied by hope may even vanish his account. From the previous example, if the traders call for that period gets right and the market goes to 103, the trader should book his profit. By being greedy and hoping to get 103.5 or 104 will also be a breach of discipline as the market might reverse from 103 and goes back to 100 at the close of the day.Thus even after making a right call, the trader might not gain money precisely by being greedy.

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Fear: The Most expressive Emotion

Likewise, fear of losing is an arena where a trader should work upon. A trader might exit a trade just with the fright of missing. And then he might leave a deal before the target price or the stop loss price comes because he is unsure about his craft. Such a concern should be acted upon and a trader should refrain from any trades which he is not certain.

The correlation between Major and Minor

A trader must put his maximum money in the sphere of his expertise and should constantly put a minor sum to learn other markets or strategies. If a trader is experienced in the options market and is lured by the returns from the futures market, he must discover the futures market first with an amount which will not move his primary trading before moving all-in on that marketplace. As well, daily profit and loss targets must be observed and reviewed from time to time. These traits will build consistency among the trader.

Steps to observe

  • Be consistent about following your trading rules
  • Planning trades in advance
  • No greed and no promises
  • Casinos are better for gambling, not markets
  • The market is always right, remember
  • Research – fundamental and technical
  • Proper risk to reward ratio
  • Trade your strengths
  • Discover new strategies from time to time, but with a less amount
  • Review your performance periodically


A trader might receive a good fundamental and technical knowledge and is ready to move in the world of capital markets. But these soft skills like discipline and emotions also play a critical part in a trader’s success and must never be ignored. It will take years to acquire these skills. Once acquired, it will be helpful throughout your life. Disciplined trading will certainly accomplish your goal of a profitable trading.

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