In almost 13 years of trading and over 5 years of running one of the largest FX trading academies, I have worked with tens of thousands of students. With such a low barrier to entry, and the potential to put yourself in the top 1% of earners, all while working from anywhere in the world, it’s no wonder that so many people are drawn to trading forex. However, beneath the surface of the luxury and laptop lifestyle, lies one of the most mentally challenging endeavours you will ever take. One aspect of that endeavour is Mastering Discipline. Today we ask the questions “what does it take to become a disciplined trader” and “why is it so difficult?”
Before we get into those two questions, let’s just make sure we’re on the same page about what it means to be disciplined. Many people believe that being a disciplined trader means having the ability to follow your trading plan. However, it is so much more than that. It also means being able to control your emotions in any given situation, having the ability to stick to your rules, regardless of the emotional battles going on inside of your mind, and regardless of the external pressures you may be facing. A disciplined trader is organised, mentally and physically prepared, and is able to execute with confidence. But, how does someone reach that stage?
What does it take?
If you want to become disciplined in trading, you must learn to master discipline in all the other areas of your life. This means you can’t stay up late watching Netflix or playing Video games until 3am, or eat junk food because eating healthy is difficult, or not go to the gym because you want to have a lie in. You can’t be undisciplined in every other area of your life, but then suddenly expect to turn on a switch and become disciplined when you sit in front of your charts.
The good news is that you CAN build self-discipline. However, it is a process that requires you to have a high level of self-awareness, it takes a lot of practise and a great deal of commitment to personal growth. I won’t lie, it is a challenging process, but ask yourself this; do you want to continue down the path you’ve been on for so long, without seeing any significant results, still as far away from your goals as when you started this journey? Or would you rather put in the hard-work and effort over the next 3-6 months to build self-discipline and start achieving those goals? If you decide to do the latter, then here are some key steps that will help you to build your discipline:
1: Understand Your Triggers and Weaknesses
As I said earlier, you need to have a high level of self-awareness. So the first step is always to become aware of your weaknesses and the triggers that lead you to cave in to short term temptations. Afterall, you can only begin to fix something if you are aware of the problem. So start off by listing the behavior’s, emotions and decisions that are holding you back. Make a list of these behavior’s and emotions for the different aspects of your life. When I did this, I broke it down into 4 categories; Trading, Health, Family and Friends, and Personal-Development. Remember, you can’t be disciplined in one specific area of your life, if you are undisciplined in other areas.
Next, for each item on your lists, you want to identify the triggers that led up to that behavior, emotion or decision. For example, if one of the weaknesses in your trading list is “taking too many trades”, then the trigger may be “frustration after losing a trade”.
2: Set clearly defined goals and boundaries
You need to have a clearly defined set of goals and boundaries for each list. This will help you to stay motivated and focused, which will reduce the chances of impulsive behaviour, or as I like to call it… “dumb sh*t”. So establish clear, realistic goals and boundaries for your trading journey, your health journey, goals and boundaries for you family and friends, and also a set of goals and boundaries for your personal development.
Your boundaries in trading need to be defined in a Trading Plan. This is where you will outline your strategy, your risk management rules, criteria for entering and exiting trades, as well as your daily trading routine. This plan should serve as a compass that guides your behaviours and decisions.
3: Build Consistent Habits
This is probably the most important aspect of building self-discipline. Your habits are automatic routines that you have practiced so many times that you can do them without even consciously thinking about it. When you build positive habits, you make it easier to stay disciplined. So once you have identified the behavior’s, emotions and decisions that are holding you back in step 1, you need to write down positive behaviors, emotions and decisions to replace them with. These positive habits need to be aligned with your goals in step 2.
Once you become fully aware of the positive habits that you need to implement, you have to get to work and start applying them into your daily routine. In the beginning, this is going to be difficult because it will require conscious effort. However, if you force yourself to continue doing it, eventually it will become a habit, and habits are unconscious. So the more you practise these positive habits, the easier they will become, until eventually you will be doing them without even realising it.
“Every action you take is a vote for the person you wish to become.” James Clear
Why is it so difficult?
The simple answer to this question is ‘if it was easy, everyone would do it’. Discipline is the most important trait which contributes to anyone’s success. However, despite the heights of success it can bring, practising discipline over a long enough period to see the results is riddled with setbacks and challenges that leaves a person questioning whether it’s even worth it. Lets take a look at some of these challenges.
From an evolutionary perspective, we are wired to seek instant gratification. That is why we so easily allow our short-term temptations to make us lose sight of our long-term goals. It is much easier to order a takeaway than to cook yourself a healthy meal. So even though you may have a goal to lose weight, the short-term temptation of eating something delicious, makes you lose sight of the long-term goal to lose weight. Or to put it into trading terms; the short-term temptation of closing a trade early to avoid losing some profits, makes you lose sight of the long-term goal of becoming a professional trader and sticking to your rules.
As I’ve mentioned already, habits are the most impactful tool to building self-discipline. However, bad habits are the most damaging to your journey to become a disciplined person. Our brain is wired to try and expend as less energy as possible for any given tasks, which is the reason why it tries to automate our routines and our behaviours. Once these routines become automated habits, they are difficult to change. Overcoming these habits and trying to replace them with positive habits requires a lot of effort and a physical rewiring in your brain.
It’s no secret that to achieve self-discipline we have to step out of our comfort zone and embrace discomfort and uncertainty. The problem is that as humans we have a natural tendency to avoid discomfort and seek familiarity and security. This fact of human nature makes it difficult for us to take on disciplined behaviours, because they often take us out of our comfort zones. It’s uncomfortable to get out of bed an hour earlier and exercise, that’s why so many of us choose to do the comfortable thing and stay in bed until we absolutely have to get up.
The people we surround ourselves with play a huge role in determining our behaviours and routines. Imagine trying to be disciplined and follow a good routine of going to bed early, exercising in the morning and eating a healthy diet, but your peers prioritise drinking, partying and eating out. The peer pressure and social expectations of your friends is going to make it extremely difficult for you to stay disciplined, make the right decisions and follow your routine. Alternatively, if your peers also prioritised those positive behaviours, then the social expectations of your peer group will make it significantly easier to follow your routine.
Discipline is the most crucial aspect of becoming a successful trader. It gives you the strength to make rational and confident decisions, it allows you to stick to your trading plan, and it helps you to stay composed during emotional situations. If you can recognise the significance of discipline, and implement it into your journey, you will significantly increase the chance of becoming a consistent and profitable trader. However, a key takeaway that you must understand is that in order to achieve discipline in trading, you must achieve discipline in all the other areas of your life.
By understanding your triggers and weaknesses, setting clearly defined goals and boundaries, and building consistent habits in all the major areas of your life, you can develop and master the skill of self-discipline. Just remember that in the beginning it will require conscious and deliberate effort, but if you keep applying it consistently, it will eventually become second nature.