Importance of Trading Discipline
Trading Discipline has always been the buzz word in the stock market and its importance has been acknowledged universally. However, it is easier said than done. Most of the time we hear that the stock market is pure speculation and no one can earn money from market with consistency. The major contributing reason to this is lack of Trading Discipline.
As human beings, we already have greed and fear and we always want more than ideal. We are never satisfied with x amount or x percentage as per our capital we invested. In practical life we believe in discipline like punctuality, determination etc but if we think and apply the same discipline in trading than we see very good result in term of profit. In stock market all come for earring. Earning is good but in bear market if we protect our capital is also need some special skill. Most of trader and investor know about Trading Discipline but even after having 10 to 15 years of trading experience it’s very difficult to implement it in trading. There are some trading discipline mentions below:
1. Identify good strategy as per your trading pattern with reasonable accuracy and Risk Reward.
2. Do not invest all capital in single stock divided in minimum 3 to 4 part. If we have Rs. 1,00,000 capital each trade should be not more than Rs.25000.
3. Focus on Risk reward. Stop loss is small and target is big.
4. Proper confirmation of level and momentum indicator.
5. Intraday idea target is 0.75% to 1% and trail at 2% max.
6. Short term positional target is 3 to 5% and trail to 10% max.
7. Make trade at right time only. Do not trade if you miss opportunity.
8. There are unlimited opportunities in the market.
9. Do not use leverage in trading. It’s very risky and loss making.
10. Do not overtrade.
11. Never let profit turn into loss.
12. Do not hesitate to book small losses.
13. Do not average your losses.
Many seasoned traders/investors, in- spite of being familiar to the concept of trading discipline, fail miserably as they fall prey to their stubbornness and arrogance that keeps piling on over the period of time. It is rightly said that it is never too late to implement a good habit, however, the earlier one adapts to these virtues the better it will be as over the course of time this will become the part of your nature and will prove it be fruitful not only in trading but in all walks of life.
Join us at Traderguide to embark on this journey of developing firm trading discipline.
- Anand Singh Gaur
- Sunil Kothari