Master your trading Mind Traps

How do you discipline yourselves?Discipline is the hardest thing to master.

http://www.investopedia.com/articles/trading/07/trading_mindtraps.asp

http://www.investopedia.com/articles/trading/02/110502.asp

Using a sound trading method leads to discipline.

Discipline does not lead to a sound trading method.

Trading Psychology is of no use if you do not actually know how to trade.

DionysusToast said:

Using a sound trading method leads to discipline.

Discipline does not lead to a sound trading method.

Trading Psychology is of no use if you do not actually know how to trade.

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Would you say that if you are (by nature) a disciplined person your ability to adapt to trading might be greater..?

Discipline in trading (and in most endevours), is the ability to repeat advantagious actions/thoughts, in order to develop constructive habits,... go figure !!

good question BS... but I am not sure I know the answer...

If I read the usual books on trading and believed what was said, then yes. Discipline, calmness and 'waiting like a sniper for the perfect trade to enter your crosshairs' are all attributes necessary to release the zen like money making maching within you.

However, seeing as the most succesful trader I know is borderline psychotic and rants and raves when he misses a move, I would have to wonder. The guy has made 10's of millions and the return on any one trade cannot have any impact on his wealth but he is very passionate and gets really, really narked when he (and his team) miss something they 'should' have got.

What I do think is that if you have a feedback loop so that you continually learn from good trades and bad, then you will move forward in leaps and bounds. Obviously - the psychotic guy does that by ranting and raving which shows lack of discipline but perhaps it's his way of ensuring things sink in.

In any case, I do believe that psychology is more icing than cake. I could be wrong though.

I heard a good quote last week “Success is the result of good judgement; Good judgement is a result of experience; Experience is a result of bad judgement”

MarketMoverTrader said:

I heard a good quote last week “Success is the result of good judgement; Good judgement is a result of experience; Experience is a result of bad judgement”

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I agree. I think you need to feel the burn in order for any of it to make sense. It's also human nature to test whether good advice really is good advice.

From what I've seen so far, I don't think discipline makes you a great trader per se( i think experience and time in the market most likely makes a good trader) a but i think discipline ensures you'll be around long enough to have a shot at being a great trader, and can also contribute to you moving along the learning curve more quickly than someone who is less disciplined.

I also agree with DT that having a trading strategy which you have confidence in will create more motivation for you to be disciplined. you can't really be disciplined unless you have a plan to stick to, and you won't want to stick to it unless you have confidence in that plan working out for you...

i also think that having a trading strat that you have personally had a hand in developing and testing, and understanding precisely why that trading strat will work (ie understanding a bit about the theory behind positive expectancy, law of large numbers, and some common mind traps such as the gamblers fallacy) helps you understand the need for discipline and provide the motivation to stick to the plan...

MarketMoverTrader said:

I heard a good quote last week “Success is the result of good judgement; Good judgement is a result of experience; Experience is a result of bad judgement”

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Superb - so if an associative law applies, success is the result of bad judgement. Love it.