DISCIPLINE

 “Some people say, “I can’t sell that stock because I’d be taking a loss. If the stock is below the price you paid for it, selling doesn’t give you a loss; you already have it.” —William O’Neill, Founder, Investor’s Business Daily

Trading is about skill development and discipline and not understanding dark matter. So it figures that this is going to be an important section. Simply put, you have no chance, trading any market, at any period, with any stock, in any country, making money as a trader without discipline.

Discipline is executing your plan as you set out to do it, without altering it in the middle. Discipline is executing your detailed plan every time.

“Sell is not a four-letter word.” Hit the stock and reevaluate. Pay attention to how easy it is to get out. Then find the next trade.

Do not judge your trading system based upon one trade. Executing your plan, being disciplined, will lead to long-term success.A good prop trader hits the stock and reevaluates. Not just hits the stock. Hit the stock and reevaluate. It is always your option to formulate a new plan. You can always buy the stock back.

You might recognize that after hitting the stock below 30 that it didn’t go down the way you thought. For example, you may exit easily at 29.98, when you anticipated you would at best clip 29.90. In this case, you may gather information that this stock may still be strong. So develop a new plan to get long and only exit after a significant move up or a move to a new low.

new prop traders often make the mistake of overvaluing one trade.They develop a plan and hit the stock executing their plan, and then watch in frustration as the stock trades higher. They conclude that they were wrong to hit the stock. In effect, they conclude that being disciplined was wrong. Wrong. You are developing a system that will produce consistent results over a long period of time. One trade is not the measurement.

Execute your plan. Hit your stock if it reaches your exit point. You will never be a successful trader if you are not disciplined. I do not know one successful trader who is not disciplined. Heed the advice of Jesse Livermore, who said, “A loss never bothers me after I take it. I forget it overnight. But being wrong—not taking the loss—that is what does damage to the pocketbook and to the soul.” Do not let the market teach you this lesson by taking your money.

One trade is not the measurement.

Execute your plan. Hit your stock if it reaches your exit point. You will never be a successful trader if you are not disciplined. I do not know one successful trader who is not disciplined. Heed the advice of Jesse Livermore, who said, “A loss never bothers me after I take it. I forget it overnight. But being wrong—not taking the loss—that is what does damage to the pocketbook and to the soul.” Do not let the market teach you this lesson by taking your money.

 You can’t try to be a disciplined trader. You must be a disciplined person to be a disciplined trader.