How Can I Get More Discipline? (Part 2 of 2)
Last week we commenced our
discussion of discipline by suggesting that in the vast majority of cases a lack
of discipline is not a trading psychology (or performance psychology) issue. Rather it's a
function of one of the following causes:
Lack of a valid
positive expectancy strategy!
Lack of belief in
adapt execution to changing market conditions!
management of risk!
Before you even look to
performance psychology to improve your consistency, you must ensure you have these basic
trading and strategy fundamentals in place.
Once in place though, continuing poor discipline
may be something you can address via
performance psychology tools and strategies.
Poor discipline will be evident
through an inconsistent application of your trading plan.
However, you can't just "get more
discipline". That's not how this works. Rather, discipline is an outcome. And
achieve that outcome through:
appropriate habitual behaviour.
routines and strategies for maintenance of an appropriate state
for optimal performance.
Habits and state management!
are your goals.
Let's explore them both.
Habits lead to consistency.
Consistency leads to what we call "disciplined trading".
There are six parts to
establishing new habits.
New habits take time to stick. The time varies from study to
study but it's typically stated as requiring a minimum of 30
days of focused effort.
New habits won't come easy. Old habits are easy. And the process
of changing these habits from old to new means you're forcing
yourself to take an action that you don't actually want to do
(at some subconscious level).
How will you maintain motivation during these 30+ days? Get
clear about these motivations. Write them down. And remind
yourself of them often.
Consider your old habit. What are the consequences of
continuing with this old and unproductive habit? What will this
mean to your success or failure as a trader? How does this feel?
Consider your new habit. What will the impact be if you do
replace your old habitual behaviour with your new and more
productive habits? What will this mean to your success or
failure as a trader? How does this feel?
Identify the trigger that leads to the old habit and "reprogram"
this to commence your new habit process (as designed below).
Spend ten minutes practicing (or visualising) the trigger
leading straight into the new process.
Habits require clearly defined rules or processes. You can't
develop consistency if the process is not clearly defined. So
document a process (set of rules or steps) that you should
habitually follow, if you were to define your behaviour as
Make the habit-change process as enjoyable as possible. If it's
a chore then you'll struggle to continue despite the best
motivation. Identify the enjoyable parts of the habit process
itself, and focus on enhancing that experience. Implement rewards into the process. And actively work to remove any
roadblocks to easy and enjoyable completion.
Monitor your progress. The change process will not often proceed
smoothly. You will encounter challenges. Implement a "habit
change" review into your post-session review. And if you fail,
don't stress. You'll have learnt something. Identify the cause
of the failure, adjust your plan to avoid or manage this in
future, and start again.
This is closely related to motivation. Adopt some means of
public or private accountability. You may wish to provide regular
updates on a publicly visible blog. Or even better
provide regular updates to a close friend or partner.
This private option is actually by far the better as we
desperately do not want to appear a failure to those we love.
This accountability acts as a further
motivation to stick to the
process of habit change.
Be sure to keep everything as
simple as you can. Stick to one major habit change at a time. And again let me
stress... make it enjoyable.
Let's look at a simple,
non-trading example first. Say you're someone who loves to sleep in, usually
hitting that snooze button 2-3 times each morning; but it's starting to make
you late for work. You need to get out of bed on
time, every time.
The motivation for change is
quite simple - to save your job! Visualise how it will feel to have to face
your boss again for lateness. And how it will feel if you lose your job. Write
down these feelings. Now visualise the feeling of satisfaction when you blitz your next
performance review, having demonstrated that you are a reliable and diligent
The trigger is obvious - the
alarm. There is no need to change this. The problem is with the process.
Currently on hearing the alarm the process is to roll over and stop that damned
noise. This needs to change. A new process is designed in which you move the
alarm clock across the room such that you have to get out of bed to turn it off.
You place the alarm clock in its
new location, confirm it's visible from bed, set the time one minute ahead and
give it a test. Perfect!
You know for the first few weeks
you will struggle with this immediate jump out of bed. You need something to
satisfy the "enjoyment" part of the process. So you expand your "process" to
include two actions before bed: turning on the breadmaker timer for that fresh bread smell on waking; and
creating a morning motivation playlist on your iPod.
Each evening... report to your
partner and consider how easy it was to get out of bed that morning.
The same applies to trading.
Let's work through one example.
If your problem is breaking of
session loss limits then you might address these steps as follows:
Motivation... a printout of your
equity curve will be a great motivator here. How do you feel seeing the massive
downward spikes associated with your breaking of session loss limits? How do you
feel after these sessions? How does it feel having to show this to your partner?
Analyse some figures... how long does it typically take you to recover from
these blowouts? How much quicker would your recovery have been in each case if
you halted the slide at the allowable maximum loss? How much nicer does that
feel? Write all this down. And review it regularly - preferably before each
session for the next 30 days.
Trigger... the trigger is the
hitting of maximum loss limits. Most people don't
actually have any thought out and documented procedure for stopping, apart from
a statement in the risk management part of their plan that states that they will stop
at their maximum daily loss. A habit requires a procedure, so take some time
to write one out:
cancel any pending orders for new trades.
Work an exit on
any remaining open trades.
platform to simulation mode (ruling out any live trades).
Walk away for one
complete the post-session routine.
Practice your routine, either
through visualisation or while in simulation mode. Rehearse the
transition from the trigger to the process. Confirm it all works ok.
Enjoyment... it's never going to
be fun to hit your maximum stop limit. But you can always limit the hurt by
rewarding yourself in some way during the one hour break. Plan for your reward.
Hopefully though, you'll never get to see it!
Review... this is not just for
those times when you hit the session limit. After each session, ask yourself
whether you appropriately provided yourself with the motivation to stop at your
session limit today. Do you need to adjust your processes?
Accountability... show your daily
results to someone you DO NOT wish to disappoint!
Yes... it's more work. Changing
habits is never easy. But once you've installed the new process as an automatic
outcome of the trigger, there is a lot less thought and planning required. The
new behaviour has become... habitual! And your work as a trader has become...
So identify your current
discipline challenges. However your lack of discipline
shows itself, take some time now to consider how you'll establish new habits
through documenting the six parts of habit change, as listed above. And commit for a minimum of 30
days to ensure the new process does become a new habit; and you become a
Trading at its most basic level
is a decision making activity. Success comes from improving the quality of our
With a proven trading strategy
that fits your lifestyle, personality and risk profile; and with clearly defined
habitual processes to ensure a following of your trading plan; further lapses in
discipline will likely be a result of poor emotional management
impacting negatively upon your decision making.
Becoming "more disciplined" is a
result of taking actions to place yourself in the state most likely to enhance
decision making. And standing aside when you are not in this state.
Again we have several parts to
our ideal trading state
We need to be familiar with our Ideal Trading State (ITS). I've
borrowed this term from Steve Ward's book,
Trading". In this book, Steve breaks down your ITS to it's
component parts - the environmental factors, the physical
factors, and the cognitive (psychological) factors which
together allow you to best operate "in the zone".
Understanding these factors allows us to use the following
techniques (2-6) to achieve as close as possible to our ITS. And
more importantly, to recognise and correct any deviation from
Recall a recent time when you were operating in the zone and your behaviour and actions seemed to flow perfectly in tune with
the market environment. What were the environmental, physical
and cognitive factors which were present? How will you reproduce
this in future (as much as possible)? How will you recognise
when you are operating outside of your ITS? How will you
interrupt your trading in order to place yourself back in your
life outside of trading
Create a list of go/no-go criteria. We can't check life at the
door as we arrive at our trading desk. If life is causing stress
which negatively impacts upon your trading decisions and
actions, then don't trade until the situation has resolved
Commencing trading again in a month from current equity levels,
after having taken a break and resolved life issues, will be
vastly preferable to trading in a month from a great drawdown
level as a result of the poor discipline that comes from
excessive life stresses.
management and physical health
Fatigue management is very much underappreciated. The fact is
though that fatigue has a massive impact
upon your decision making ability and your emotional management.
I will even go as far to say that this is, in my opinion,
perhaps the most important element in this article.
Develop a plan for ensuring you are as rested as possible
whenever you trade. And include a "no trading" rule to prevent
yourself trading when you are likely to be suffering the effects
of either acute or chronic fatigue.
And physical health... improve it!
Eat better than you currently eat. Exercise better than you
Adopt relaxation processes within your pre, during and post session
routines, as well as within your contingency management and recovery
processes for when it all goes wrong!
Better decisions are made when your mind is clear and your body
The simplest and most effective relaxation processes involve
breathing exercises. If you don't have anything defined already,
do some research on breathing for relaxation.
Affirmations and Visualisations
Affirmations are great for confidence. But I find them even
better if used to affirm our adherence to our trading processes.
The same applies to visualisations. Keep them process focused.
Identify your current discipline-related challenges and develop
affirmations and visualisation processes to enhance confidence
and keep your actions based upon your habitual trading
psych / mindset monitoring
Record observations on thoughts, feelings and behaviour at key
times through your trading process; in particular those times
when you display poor discipline.
Regular review of your journal allows recognition of patterns
(over time) and triggers which set off these patterns. This
recognition then allows development of solutions through rule or
process changes, or through further affirmations or
tip which ties in both habits and state management... you may wish to develop
habits to ensure all your state management processes are actually followed!
It is of course impossible to
deal with all the manifestations of poor discipline, including causes and
solutions, within one article. Hopefully though, this article has provided you
with a good overview of the processes needed to overcome any current
deficiencies in discipline.
In particular, is your poor
discipline not actually a psych problem at all, but more a function of:
strategy, market or timeframe for your lifestyle, personality or
Lack of belief in
your strategy due to insufficient testing.
Lack of ability
to adapt execution of your strategy to changing market
management of risk leading to wild swings in both P&L and
Once these foundations are in
place, then you can more readily look to performance psychology for the
tools, techniques and strategy for achieving a disciplined outcome; via creation
of appropriate habits and establishing the environmental, physical and cognitive
factors required to achieve our Ideal Trading State.
I recognise that this article has
not provided a simple solution which will solve all your discipline woes!
Unfortunately that's not the way it works. Improving discipline is a process of
developing productive habits and managing our emotional state, to ensure the
highest quality decision making. The task ahead may seem overwhelming when
viewed from the perspective of the above lists. But remember it's a process.
Take the first step. Find the one item above that you can most quickly and
easily implement and get started NOW.
For a more in-depth discussion of
these and other tools, techniques and strategies for managing discipline, I find
the following two books incredibly worthwhile:
"High Performance Trading" by Steve Ward
"The Daily Trading Coach" by Dr Brett Steenbarger
If you like High Performance
Trading, you might want to consider enrolling in Steve Ward's 8-week webinar
program commencing April 23rd. Check out his site here for dates & details:
High Performance Global. I haven't completed this version of the course, but
did complete it's predecessor, the 6-webinar TraderMind series held back in
2012. If you're new to the ideas of trading psychology, or don't have adequate
plans in place, this is a good option to get you on the right track.