Focus & Discipline Lesson 1
First and foremost I ask that everyone take the 15 mins and stops doing everything else they may have going on and zones in and really pays attention. There is always a method to my madness.
I have always said there is no crystal ball in trading or magical system that will produce endless profits. This post is going to be the closest thing to a crystal ball, and ultimately the most important topic in determining your overall success or failure and whether you will remain out of the 95% of traders that fail.
In my first trading interview ever, I was asked by my future boss what two things make a trader successful? I think I responded something like a good work ethic and confidence. His response was Focus and Discipline. At the time I didn’t take much of it but as time went on and I was expanding in my career, I began to learn more and more at what he meant. I will never forget him telling me that.
Have you ever opened a trade for no logical reason other than you feel a move has gone too far?
Ever exited a trade early then watch it run in your favor?
I have. I have done this and much much more.
Discipline is the answer. Successful traders have it, and those who don’t fail. After all the people I have trained this is over half the reason for all failures.
This post isn’t really about trading, it’s about learning to acquire focus and discipline in your life, and as a result you will be a better trader. I promise this will be the best time you ever spent on any training, and at the end of the post I am going to prove it.
The problem with most trading strategies or other ways to make money is that they assume you have the discipline to implement them.
I have read hundreds of books dealing with the psychology of traders, trading strategies and self help books. All of them have impacted me in a positive way. However, for much of my life I struggled with a lack of discipline, I tended to be a person doing everything to the extreme, whether that was in sports, relationships or work. I have found that the times I am most successful in my life have come at points where I was disciplined in everything I was doing.
After years of trading and training people, I have come to a conclusion that perfect discipline not perfect strategy is what determines success.
This post is not intended to teach how to just become a better trader, but how to achieve greatness and all the goals and aspirations you have in life.
With that said, I am not a guru of discipline. It’s a virtue that takes constant work and self evaluation. I believe I am good teacher of how to obtain discipline, because I went from having very little to a level that I feel few others ever achieve.
I am going to discuss the mistakes I learned from and some tools you can use to help improve your discipline. No matter what your starting point is, Discipline is something you can always work on.
I believe that the most happy people in life are disciplined individuals, and I know this from personal experience. Discipline brings us health in terms of our relationships, reaching goals, wealth and much more. You can be happy in life with mediocre discipline, I know, I had this for a long time. We can be loved, do well at our work, and be happy with our family. That is if mid-level wealth, mid-level knowledge, and mid-level happiness are acceptable to us, and for many it may be. I assume since you are reading this lesson that your not one of those people.
Think of one of the greatest people you know personally, I doubt that person is a mediocre person.
For practice write down characteristics of this person and how they influenced your life.
Now think or take a look at how many people you know like this person, probably one or two, in any case not many. My answer would be a group of people, it would be the immigrant factory worker that moved to the United States over a 100 years ago, more simply put my grandparents generation. This generation saw some of the most difficult times in the history of the world. With depressions, wars, and famine that people in my generation have very little understanding of. They could have folded in and gave up when faced with adversity. They refused to accept the status quo, and as a result impacted the lives of their children and my generation. They did what their hearts told them, despite the obstacles, sorrow, distractions and fear. This required a great discipline in many assets of their life: work, family, positive outlook, faith, and a refusal to give up. As a result they reaped the rewards and as did the people around them and the generations to come.
Every accomplishment by our heroes required some human characteristic. Einstein for his theory of relativity, Michael Jordan for his athleticism and domination of basketball, Martin Luther King Jr. for his advances in anti-segration. The list goes on and on. Most would believe that these people were born with these characteristics, but this is false. Some may start at a different level than others, but they reached these levels through discipline and constant self evaluation. Plain and simple.
Thomas Edison, who patented over a 1000 inventions, said that “Genius is one percent
inspiration and 99 percent perspiration.” He failed thousands of times before
succeeding at inventing the light bulb. His ultimate success came through discipline, discipline to never give up and stay focused on his task at hand. He also used his discipline to learn from his mistakes and not repeat them over and over.
Disciplining ourselves to use our talents and work on them should be the focus of our energy, not whether someone was born with more talent than us.
Right now I want you to think about a time when you achieved success in life. Write down what it took and the steps you went through. How did you feel at the time? How did you prepare? I promise you will begin to see how it required discipline.
Now think about and write down what your working towards right now, it can be anything. Maybe its relationship based or work based. Doesn’t matter.
Discipline can help you stretch and extend your natural abilities to reach these goals. Write down the steps it will take to accomplish these goals.
If you make lists like this and update them over time and self reflect you will eventually condition yourself into being a more disciplined person. We all start at different points in terms of discipline, but it is an attribute that with training, self reflection and hard work it can be engrained into who we are as a person.
My career in the beginning was marked by periods of extreme success and extreme failure over and over. Growing up I was always a very passionate person about everything I did in life, some call it stubborn. My brother told me once that it was one of my greatest assets yet one of my largest downfalls, and right he was. I was so passionate about things that at times I experienced higher highs than most individuals, and vice versa, I could also experience lower lows. This passion led to a desire of wanting to reach my goals and aspirations, and no matter how many times I was knocked down or had a set back, I knew I would get back up.
This desire eventually led to me doing a lot of self reflecting. I looked back at my triumphs and defeats and looked for a pattern. After time I began to notice that the pattern was ultimately determined by the amount of discipline I was incorporating in my life.
What do I mean by that, simply put everything.
I was staying focused at work, and was there to work.
I was eating healthy and staying physical.
I read and studied in the pursuit of greater and better things.
I was smart with my money.
I was disciplined in my relationships and doing good things for other people.
I was disciplined in my thoughts and outlooks on life. This one is so important, and it requires great, great discipline.
Some people believe in karma, some people like the authors of the Secret believe thinking positive brings good outcomes.
They are all very right. Positive thoughts and actions bring positive reactions no matter what spin you want to put on it.
It may sound like a bunch of bs, but I can tell you that this is the truth, and believing in it will greatly improve your lives. It requires great discipline because it is very difficult to remain in this kind of mind frame when things aren’t working out. Have you ever noticed that bad luck tends to come in strings? Call it karma or what you want, fact of the matter is negative thoughts and negative actions result in negative reactions.
Discipline needs to be covered across all assets of your life. You can’t be a truly disciplined trader and not have discipline in other assets of your life. It’s a characteristic that when the rules are bent leads to failure of discipline across the board.
I worked on my discipline for years. It requires self evaluation of everything we do in our lives. On top of that it’s not just thinking about it, it has to be written down and become part of your trading plan. We can’t learn from what we don’t measure. It needs to be a daily task.
So now a very simple question, why do some lack discipline?
1. Distraction
Being distracted is trading one thought for another which is more convenient or more urgent. It’s forgetting the task at hand and losing focus on the steps its going to take to reach your goals which we mentioned earlier. When looking at this from a trading perspective, its reading emails or answering the phone while planning or taking trades. Or balancing the check book and playing solitaire on your computer next to your trade platform.
Don’t get me wrong, distraction can be a healthy thing for everyone at times. But in today’s society people are coddled and told you need to take a break or don’t work too hard. They are right to an extent, as burnout can also lead to failure of discipline. However most people tend to take this to extremes, and its something that needs to be noted if working towards a more disciplined life. Distraction tends to snowball and get out of control, making it harder to get back on track. You should set aside time to be distracted and relax, but plan that time out so it doesn’t get out of control.
2. Fear
Fear is subconsciously the greatest enemy of a lot of people.
Fear of success
Most of the time people who fear this subconsciously fear that with success people will expect more of them which they will not be able to provide.
Fear of failure
Everyone worries about what will happen if they fail, or how they will come back from it. Failing can hurt emotionally and may be tied to events in life that people don’t want to repeat.
Fear of the unknown.
Its humanly natural to fear the things we don’t know, think about your first speech you gave, or getting lost driving in a car, first interview, first kiss, whatever that unknown event is, you had a fear that came with it most likely.
Learning to balance these fears can be done by looking at positive experiences in your life and attribute the fear that came with it, and how you felt when you had the positive outcomes. It tends to be the most positive feelings we have. When we do things we don’t fear we don’t enjoy them as much as we don’t have the opposite side of the feeling to truly put into perspective our accomplishment.
You have to balance fear and become determined to not let it set you back. Self reflection and taking notes on goals you had or have, keeping track of the outcomes, whether positive or negative will help with this. Recording the positive outcomes gives you something to reference in the future when you are experiencing fear. Recording the negative experiences shows you that all though it may have been difficult you survived, and odds are you’re a stronger person for this and extended your natural abilities.
3. Delay
A lot of people tend perform well under pressure due to the fact necessity drives them to produce and be more innovative. On the other hand procrastination takes away from innovation and our natural abilities regress.
Delay can be harmful to traders in many ways. Delaying to follow the rules in their trade plan of when to enter a position or exit a position. Feeling you can make money at any time in the Forex market, so you can trade when they want and sleep away profits. There is no need to set alerts and get up when they go off. Wrong.
This inhibitor of discipline can be worked on by mapping out your day and goals along with time frames and doing what you will do when you say you will do it. It’s really that simple, and if you don’t want to do it and make strides at improving it, your result will be the same as the other 95%, your trading account won’t have money in it.
4. Despair
All of us at points in our life have experienced despair. When we do, its one of the greatest causes for the failure of discipline. You can’t prevent despair itself, what you can do is prevent situations that make you desperate.
Finance properly
Take time for your relationships
Map out the things discussed in this post and self reflect
And when it comes to trading build a trading plan which includes your risk management something we will discuss in the future. After you do that, FOLLOW THE PLAN. You set those rules up for yourself because we are all human and make mistakes. We need a guideline to constantly be keeping ourselves in check. Doing so will prevent despair and you making irrational trading decisions.
We have mapped out why you need discipline, what factors can prevent us from it, and tools you can use to work on improving your discipline. Now its time for me to show you how important this is to trading. But first, how many of you could pass a quiz on everything we discussed.
Name two of the three people I mentioned that had great discipline? Did you have discipline to pay attention?
One of the reasons some of the simplest things in life tend to work, including trade strategies, is that they are easier to apply discipline to. When you add a million variables it requires a greater discipline to remain focused and not let all the variables to side track you or make you second guess. With that said, proof discipline works.
Pull up a chart, any chart. Go to an hourly time frame and backtest this strategy with the following rules.
-Draw trendlines, in order to take a potential trade, trendline must extend past a day. Meaning the low or high you use to initially draw the line must be from a day ago.
-To go long or short a bar must close below the trendline (looking for new bearish trend) or above the trendline (looking for a new bullish trend). We will call this the signal bar.
-If you get a bar that closes above or below the trendline you will place a limit order to go long or short above or below the signal bar. Example) We were in a bullish trend and had our trend line drawn. On the hourly chart a bar closes below the trend line and the low was “X”. We will place a limit order to go short just below X. If we don’t get filled within the next two bars we cancel the order.
Take Profit: Use a 38.2% Fib retracement from where you started the trend line for half your position and at that point move your stop loss to break even. The second half target the 50% retracement.
Stop Loss above the most recent high or low. Usually within 5 hours or so.
If you do this over 30-50 trades you should be above a 60% win – loss ratio. And you will usually be risking 2:1. May take a little tweaking.
Now if this simple strategy works, why do 95% of traders lose money? Did you not just read this post?????
Discussion???:idea:
