In the often fast-paced hustle and bustle world of trading there is much written about trading plans, trading systems, etc. These are all essential components of successful trading and must be understood as well as applied.

Another key component to successful trading that is often overlooked is, “trading discipline”. What is trading discipline you ask? Simply put, trading discipline is the ability to do what needs to be done when it needs to be done. Merriam-Webster describes discipline as, “a rule or system of rules governing conduct or activity”. Merriam-Webster also describes discipline simply as, “self-control”. So discipline as at it applies to trading can be simply described as self-control which leads to the all-important action of , “follow through”.

The self-control aspect of trading is not instantly obvious to those who are just starting out. In fact, trading discipline is just flat-out confusing to some beginning traders. With that said, let’s take a look at an example of the importance of discipline.

Discipline is important to achieve any goals one sets for themselves. Nowhere in the realm of self-improvement does this ring truer than in the goals of transforming our own physical bodies. Let’s say for instance that there’s a person who wants to lose weight. In general you lose weight by burning more calories than you consume. You would think that with the large number of people wanting to achieve this goal, but failing to achieve this goal that weight loss was some infinitely difficult to understand process. I can tell you from personal experience that it is not. If you go to your family physician perhaps they can outline a weight loss program for you or you could follow one of the many popular weight loss systems such as Nutrisystem or Jenny Craig. In short, there are no shortages of information on or roadmaps to successful weight loss.

Since there are so many different weight loss plans that can lead to success then why do so many people not achieve their goal of losing weight? While there can be exceptions to this, for the most part I would have to say that most people fail to lose weight simply because they fail to follow through on a proven weight loss plan. Simply put, they know what to do, but simply do not do it. So with all other things being equal, the difference between those who lose weight successfully and those who do not is discipline. You may say I’m oversimplifying weight loss and that there a lot of emotional components that go into it. I wouldn’t disagree with you, but as I have had personal experience in this area I can say that if I failed to lose weight it was simply because I failed to follow through on a simple weight loss plan. Like many people who have successfully lost weight, I love good food and found it challenging to adjust my intake of something I love so much. In life, it’s not so much what you feel about something that matters, it’s what you do about it that counts.

So you may be asking yourself what does all this have to do with trading discipline? Well, you’ve probably heard the statistics that a large percentage of all those who enter the trading arena fail to trade successfully. There are any number of reasons why people do not trade successfully, but one of the important traits that all successful traders share is that they trade with discipline. There’s a lot of good information available on simple and successful trading methods so the problem for many new traders is not the lack of information, but the lack of the application of that information.

If a trader has the best trading plan, well funded account, and technology at their disposal this alone does not guarantee their success. Much like the typical person who fails to lose weight, even traders that have all the necessary information available to them will not experience success without exercising discipline.

One of the most important steps in not only creating your trading discipline, but maintaining your trading discipline is to be prepared prior to trading with any real money. Preparation is what will give you the confidence to move forward as it is that confidence that makes it so much simpler to trade with discipline. It is quite unfortunate that the preparation aspect of trading is so often overlooked. Much of this stems from the fact that many new traders are led to believe that they can open an account with a few thousand dollars and begin to trade successfully. Also, new traders are constantly bombarded by the almost endless number of, “get-rich-quick-schemes” which promise riches with little or no work. It stands to reason that a large number of those who trade unsuccessfully have purchased some canned trading solution promising instant riches.

Here are but a few examples of proper trading discipline:

1 – Learning to trade properly before taking a single trade in a real money account

2 – Taking trades when your trading system dictates you should

3 – Respecting the risk levels as outlined by you trading system and applying them as dictated

4 – Only trading with risk capital…that is money that you can afford to lose and not have it affect your lifestyle

5 – Understanding that losing trades are a natural part of trading

6 – Understanding and accepting that your account equity will fluctuate as your trading system is in sync as well as out of sync with the markets

So to summarize, if someone asked me why trading discipline is so important I would tell them because it is essential to trade successfully. I would tell them that it is not just a good trading plan or trading system which makes a trader successful, it is that trader’s level of discipline to follow through on a good trading plan or trading system.