I believe that one of the most common reasons for traders to fail in short term stock trading, or any trading for that matter is due to lack of discipline. I also believe that many traders may not recognize that they are deficient in their discipline which in a way is self fulfilling, sort of a Catch 22. We all know that “you don’t know what you don’t know” so if you don’t know I’m telling you right now, explore the possibility that one of the reasons that you may not be the type of trader that you want to be or think that you should be may be due to a lack of discipline.
Most people see themselves differently than how others see them so you may even want to present this question to the people around you that are the closest to you be because if there is a discipline deficiency in one area of your life it most likely will show up in other areas as well. I would not suggest to ask an open ended question like “What is wrong with me?” because that can potentially lead to an answer that you do not want to hear and it could create huge problems and very long conversations but asking trusted and close people specifically about your discipline hopefully will not be a problem.
My experience from communicating with literally thousands of traders is that in general they are very smart people; they learn trading concepts and techniques quickly in most cases and many are very creative in their thought process coming up with new and innovative trading ideas. Most traders that I communicate with are not full time traders; they actually have real full time jobs. Those jobs range from manual laborers to engineers to doctors to entertainers and whole list of occupations. The point being that if they are intelligent enough to function in their chosen profession they are very likely intelligent people, the question that I ask is if that is the case why do so many of them fail when it comes to trading.
Some very common things that I have observed about traders when it comes to trading is that in general they are emotional, untrusting, they lack confidence, some lack knowledge and many seem to always think that they may have a better way to trade today or right now which leads them to constantly change the way that they trade. All of these things lead us to be undisciplined; they lead us to break our trading rules jumping into the market when our own rules may have told us to stay out and getting out of the market when our own rules told us to stay in. It’s almost like we think that if success doesn’t happen quickly and in the specific way that we want it to happen we will force the market to bend to our will and what we want it to do, nothing could be further from the truth.
If we could give up the notion that there are good trades and bad trades and see them all merely as trades it would free us up to trade with allot less stress and in a much more confident way. Trading is a business nothing more or less, just like any business that we run there are constant business decisions that must be made. Some of the business decisions that we make will be good for our business and some of them will be bad for our business but if a business owner can make good business decisions most of the time, may be 70% or 80% of the time, the higher the better, it is very likely that the business will succeed. Trading is no different, if we look at our trading business as a business and realize that each trade that we decide to participate in or not participate in is just a business decision and nothing more we will be able to trade in a more unemotional way with much less attachment to the trades that we make.
Each trade is just a trade, no trade should be so dramatically important that it greatly impacts our ability to function or to trade going forward so we need to trust our trading method enough to blindly and consistently follow our rules, we need to trust our trading knowledge trusting that we are intelligent and we do actually know what we are doing and we need to remove the emotions or the judgment from trading. Trading should be fun not stressful. If we put ourselves in the best position possible to profit from the trades that we make there really isn’t much more that we can do. We cannot control which way the market goes or what other traders do in fact all we can control is what we do and how we conduct ourselves. If we conduct our trading business in a thoughtful intelligent and honest way leaving the emotions to our personal lives as much as possible and get ourselves out of our way we will have allot greater chance for success. Being a full time trader would be a great position to be in because you could have unlimited wealth, unlimited cash flow and unlimited freedom in your life. I believe that the only thing that is keeping most of us from experiencing this is us, when we learn to get “us” out of our way and when we learn to trust ourselves in our trading, success will quickly follow.