5 Tips for Becoming a More Disciplined Trader
May 2, 2019
5 Min Read
When we think about successful trading, we often focus on the mechanics of finding a trade entry, managing the trade and then closing it for a profit or a loss. The reality is, that’s only a small part of the overall trading process.
Before all of that, we have the hours and hours of learning time; of being focused and deliberate in our practice and studying. After that, even when we’re trading, we have to commit to hours of planning and preparation time each week.
It’s not just about executing the trades, there’s so much more.
However, a lot of traders struggle with the discipline it takes to perform like a professional. Learning in the right way, performing thorough analysis each week, making use of their trading journal. If you can’t commit to doing what’s needed and, instead, look for shortcuts, you’re going to end up losing in the long-term.
Fortunately, self-discipline is something we can develop by putting in a bit of work. Let’s go through five key tips that you can use right away to start building up that calloused mind.
#1 — Developing New Habits
Studies have shown that, on average, people can develop a habit by performing an activity consistently for 66 days. Obviously, this will vary somewhat depending on the person, but it’s a useful benchmark to keep in mind.
The studies found that even if the individual slipped up and didn’t stay consistent once or twice, it didn’t hold back their progress towards developing the habit, as long as they kept going afterward.
Imagine how this could improve your trading. If you committed to an hour of analysis after breakfast each day without any distractions, after 66 days it may have become a new habit that you can stick to in your daily routine.
#2 — Structuring Your Time
The next key tip is to structure your time in a way that allows you to focus better on one thing at a time.
For this, I would really recommend the Pomodoro technique. This technique works fantastically well for the preparation phase of your trading or for when you’re still learning and practicing. This is how it works…
Your work is going to be done in periods of 25 minutes with a 5-minute break at the end of each period. After four of these 25-minute sessions, you can take a longer break of up to 30 minutes.
The best way to use this approach is to set a timer for the 25-minute period or use a Pomodoro app which does it all for you. When the alarm sounds, make a note of where you are in your work (so you don’t lose what you were working on) and then step away from the screen for your 5-minute break to refresh your mind. This is your chance to give in to those social media notification temptations!
This sort of approach works exceptionally well because we’re not robots and we need to give ourselves the chance to break out and do other things. If you know you’ll have separate time to be distracted and check out what’s happening on Instagram, you’ll be able to focus more on the work itself when it’s time to knuckle down!
#3 — Focusing on One Task at a Time
If you want to get the most out of yourself and be more productive or efficient, you should get into the habit of focusing on one task at a time. If you want to understand why this is so important, a great book to read is ‘The One Thing’ by Gary Keller.
When we switch between things we’re working on or attempt to multi-task, we’re just giving in to distractions and reducing the chance of us completing what we need to do. This is not good for our self-discipline.
So ask yourself… what is the one thing that you need to do right now?
Whatever it is, write it down and do it. Use the Pomodoro technique that we outlined in the previous point and use as many periods as you need until that task is done. Then move onto your next priority.
#4 — Writing To-Do Lists and Checklists
Following on from the last point, we need to be sure that we know exactly what we should be focusing on as our priority.
At the start of the day, decide what’s on your to-do list. This will make focusing on one thing at a time much more manageable.
When it comes to individual tasks, if we don’t have a clear idea of what we need to do, it can be too easy to get side-tracked. If we want to stay disciplined with what we’re doing, we should make use of checklists.
As a trader, there are specific tasks we perform every single day. After a while, they can start to feel like second nature, but this is when complacency can begin to set in. By using a checklist to keep ourselves on track and perform tasks in the correct order, it keeps us more disciplined and more effective.
#5 — Your Diet
The final, and perhaps, most critical point is your diet. Our lack of self-discipline will often come down to our lack of focus. Our level of focus is often dictated by what we have been eating or drinking.
If you eat healthily and regularly, you will maintain your blood sugar at the appropriate level. If your blood sugar level drops, your self-regulation systems work less efficiently. This can lead to you becoming more distracted and giving in to temptations. You will struggle to regulate your behaviour.
We also need to make sure we are drinking plenty of water throughout the day. Studies have shown that even when you are marginally dehydrated, your brain function can decrease massively.
One particular study shows that being adequately hydrated can improve brain function by up to 40%. This will make it easier to be in control and focused, which will help keep you disciplined.
However, the most important aspect for any of these five key points is how committed you are to changing and improving. Improving your own self-discipline can only come from within yourself. You need to reflect on your long term goals and align your short term targets with them.