What Does it Mean to be a Disciplined Trader?
What does it mean to be a disciplined trader? Notice I said ‘be’ a disciplined trader, not try to be one. This makes the important distinction that the act of being a disciplined trader is not something we can will ourselves to do. Discipline is best viewed as the process of gradually integrating the proper action and thoughts patterns—that are going to move us towards our goals—into our identity as a trader. It is only once the actions and thought patterns that are in line with what the word discipline means to us have been ingrained into who we are, how we think, feel, and act, that we can say that we have attainted the status of a disciplined trader.
Discipline is not about forcing yourself to do the right thing; it's about turning the right thing into habit patterns so that no force is needed to perform at a high level.
Where Does Discipline Apply?
I would say that discipline applies in all areas of our trading. Some areas of trading will require more discipline than others at first, prior to the proper thought and action patterns being integrated into our identity. And I would also say that the areas that discipline applies to must be discovered through error and failure to adhere to your process. For example, in my trading I am really focusing on only positioning myself in the 90/10 games: the trades that I have proven success in and without a doubt has the variables that constitute an edge setup for my system. If I did not fall short of that aim at first, there would be no need to discipline myself to do the right things. No need to be disciplined, for I am already doing the right things. But since I am flawed and developing I do need more discipline in this area and the process that follows is what moved me forward the most.
How do we Get Disciplined?
Drawing on the personal example above, there were a few steps I followed in order to internalize the principle of only trading the 90/10 games. First of all, I had to make it crystal clear what a 90/10 game was for my trading. It is impossible to discipline yourself if you do not first define what you are aiming to accomplish. What did that look like? Lots of studying, documentation, depth of learning, and repetition. I had to make an edge setup so clear to my mind that there was no doubt whether this was a trade I should be involved in or one I should pass on. It was only through the process of defining what it meant to be disciplined in this context (only taking edge setups) that I was able to enact that discipline in real time. It would have been impossible for me to discipline myself to only take the highest of quality trades if I did not first define and make explicitly clear what those trades looked and felt like. In essence the process of disciplining yourself as a trader revolves around first defining what disciplined behavior would look like in the context of your goal. Then once that definition has been established it comes down to your ability to adhere to that disciple in real time. In the context of this example, I had to cultivate the ability discern an edge setup from a noise setup in real time and acting accordingly (if variables are present take action, if not pass). I must make it clear also that this is a process, not something that happens all at once. Another key component of internalizing thought and action patterns that move us towards our goals is repetition and consciousness.
How do we Get Disciplined?
Consciousness in simple terms refers to being consciously aware of what you are doing and why you are doing it. We can only do one thing well at a time, and by deliberating acknowledging that fact we are more equipped to stay grounded in the present moment. In real time we must always aim to remain aware of the thoughts that come into our mind (are they in line with those of a professional? Am I interpreting the market information from a neutral perspective, or am I assigning positive or negative significance to the data?) as well as the actions we should or should not be taking. Proper repetition in real time as well as in practice is what allows us to enact the ideal within us in the heat of the moment, during the execution phase. In the absence of repetition there is an incomplete mental framework in our minds that we are not able to draw upon, and thus unable to “be a disciplined trader”. We must fill in that incomplete mental framework with the correct thought and action patterns in order to enact them in real time. For example, had I not made it clear what a 90/10 game was for my trading, there would be no frame of reference or mental framework to draw upon to contrast a quality trade from a poor trade in real time. In the past, this would result in frustration and a “lapse of discipline”, but in reality my mind had nothing to draw upon in the first place. No frame of reference for what it meant to be a disciplined trader (in this context only taking the highest quality trades that undeniably have the variables that constitute an edge setup), and thus no ability to be disciplined in real time.
Draw on Other Domains From Your Repertoire
Take jiu-jitsu for example. There is 0 internal struggle when the time to train comes around. Training has been deeply integrated into who I am as a person. It has become part of my identity. Why is that? Because long ago I made it explicitly clear that engaging in activities like lifting, training, recovery, etc., are actions that are going to move me towards my goals across all time frames. Why would any internal struggle arise if doing the right things was undoubted a part of who I am as a person? What room would be left for failure if there is no conscious thought required to do the right things? This is the level I want to get to in my trading, and I will do so through deliberate practice, consciousness in real time, and lots of repetition. Trading is a much more complex domain that is certain, but the concept is transferrable and that is what matters most. You can apply this to anything like reading, writing, eating healthy: connect all short term actions to your longer term goals, make it clear what discipline means in the context of your goal, and watch internal struggle dissipate and discipline will be your tool to yield on a consistent basis.
thank you for reading
Writing like this always helps me get more clarity on an obstacle that’s purpose is to make me better. I hope the concept can be of help to other traders as well. I have a lot more to say on this subject however I am still learning myself what it means to be a disciplined trader. I look forward to sharing more in the near future and thank you for reading.
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