Tactics to Become a More Patient and Disciplined Trader

[maxinger]

Well. for day traders, tactics has to be changed

Avoid using market orders -->
Use market orders for rapid market

Use alerts to watch stocks for you -->
Glue yourself to the computer screen all the time.

Log out of your trading platform during market hours -->
Glue yourself to the computer screen during market hours

Use dedicated accounts for specific strategies

Use a smaller experimental account for learning and strategy development

Favor systems with lots of entry signals

Back test your strategies (and move towards systems trading)


Use smaller position sizes (big one for me)

Use checklists to score trades

Just keep on trading -->
stop trading when you hit your daily max stop loss.

 

[Baozi]

maybe a bit off topic but.. you should keep a journal where every day you write your thoughts about the market and some what/if analysis of likely scenarios. Before entering any positions confirm if it is consistent with what you wrote. the journal has to be paper version, no electronic things. it is scientifically proven that handwriting helps to internalize ideas. In this way its more likely that you will stick to your plan rather than ignoring it.

 

[smallfil]

This is a thought-provoking response. What I've experienced is if my position sizes are too large, my patience go into the red. Dialing back individual position sizes allows me to sit through the normal volatility/fluctuations and stick to my trading plan. In effect, I'm able to develop a "healthy level of indifference" to individual positions, such that I'm not constantly watching price action and thinking about overriding my trading plan.

Using proper position size allows you to be more relaxed trading. One trade is not more important than the next trade. Remember too that if you have 5 trades, you do not know ahead of time which would be the biggest winner. So, you cannot load up on one trade at the expense of the others. Not real smart if you do. Even the very best setups have a failure rate. It does not work 100% of the time.

 

[MarkBrown]

maybe a bit off topic but.. you should keep a journal where every day you write your thoughts about the market and some what/if analysis of likely scenarios. Before entering any positions confirm if it is consistent with what you wrote. the journal has to be paper version, no electronic things. it is scientifically proven that handwriting helps to internalize ideas. In this way its more likely that you will stick to your plan rather than ignoring it.

this is so true i usually carry a piece of paper around with my goals written down. anyone that doesn't believe that this works should really give it a try. i live by a piece of paper and i am so proud that my grand daughter has taken up her pawpaw's habit. i feel like there is such an advantage to making goals a tangible.

 

[sroehling]

I think what you are really trying to say is I want to be a day trader, how do I do it?

Actually, I wrote the article in consideration of moving towards higher timeframes. Nothing against people who want to day-trade, but I have my own beliefs/reasons to prefer longer timeframes. For example, I believe there is more conviction in a daily/EOD close than intraday and this is what I want to orient around.

Not being a professional, day-trading also conflicts with my daily personal/business schedule. I do analysis after the close and on weekends. I might login intraday to update my orders, but otherwise stay logged out.

Longer timeframes also seem to work with my temperament better. I prefer to think/"stew" about my positions, catalysts, etc. over longer periods, rather than making more rapid-fire decisions on entries and exits.

There's one more reason I don't day-trade: By trade, I'm a software engineer, which for the last few decades entails staring at computer monitors all day long. For the sake of my eyes, I don't want a style of trading which also needs me staring at computer monitors all day. This may seem trivial, but it's true

The above being said, I do follow some day-traders and have learned some important lessons from them.

 

[sroehling]

maybe a bit off topic but.. you should keep a journal where every day you write your thoughts about the market and some what/if analysis of likely scenarios. Before entering any positions confirm if it is consistent with what you wrote. the journal has to be paper version, no electronic things. it is scientifically proven that handwriting helps to internalize ideas. In this way its more likely that you will stick to your plan rather than ignoring it.

Ostensibly, this may seem off-topic, but I do think journaling plays an important role to improve trading discipline and performance. I may be missing out by not using physical paper, but I write down these things in an iPhone journaling app. Over time, I'm able to go back through these journal entries and look for patterns w.r.t. things I keep observing, or to do a post-mortem on an individual trade.

 

[nooby_mcnoob]

Best way to become a more disciplined trader is to become a more disciplined person. Find something in your life that you need to improve and improve it through discipline (not sheer will, that will never work.)

 

[sroehling]

Best way to become a more disciplined trader is to become a more disciplined person. Find something in your life that you need to improve and improve it through discipline (not sheer will, that will never work.)

At least for me, this also goes both ways. For example, trading has taught me a lot about risk management, the importance of perseverance, etc.

 

[nooby_mcnoob]

At least for me, this also goes both ways. For example, trading has taught me a lot about risk management, the importance of perseverance, etc.

I can see that. I learned about not being afraid of failure through my personal life. I think I'd rather have learned it through trading?

 

[sroehling]

I can see that. I learned about not being afraid of failure through my personal life. I think I'd rather have learned it through trading?

Yes, failure is a big one. Trading is one of the few avocations I can think of where failure is not stigmatized and is in fact a normal part of doing business. For example, most traders would be delighted to have a 60-70% win rate (30-40% failure rate).

I also see what you're saying about trading not being the best way to learn about failure. Most people won't stumble upon trading until their adult life, if at all.