Discipline in daily life helps us stay focused on reaching our goals practically while sticking to the relevant rules. This allows us to overcome obstacles pushing us to newer heights.
Similarly, imbibing discipline in trading means that traders stick to well-known rules and maintain a practical approach towards achieving their financial goals objective.
Developing disciplined trading with objectivity calls for mastering the art of managing powerful emotions such as fear and greed. Fear Of Missing Out (FOMO) in trading is an important part of trading psychology, but sometimes Joy Of Missing Out (JOMO) is a better emotion to have than FOMO.
However, it is easier said than done! Discipline in trading must come from within. The trader must have the willpower to stay firm on the decided plan and follow the trading strategy religiously.
Reckless Trading VS Disciplined Trading
|Reckless Trader||Disciplined Trader|
|Has a casual approach towards trading, thinking it is easy and every order would lead to profits||Considers trading seriously and sets realistic goals|
|Avoids following a systematic strategy or a planned approach||Trades methodically and follows the plan consistently|
|Whimsically places orders based on random tips/advice/recommendations without any due diligence||Makes informed decisions backed by research and sufficient trading practice on demo accounts|
|Does not implement risk management tools to protect the portfolio||Is mindful of the risks at hand and adopts risk management tools to protect the investment portfolio|
|Tends to overtrade, which could result in heightened losses||Is aware of the law of averages and does not panic when trades go otherwise. The disciplined trader understands that not all orders would result in returns|
|Does not upskill and remains unaware of advanced tools, new strategies required to stay ahead of the curve||Understands the importance of new trading strategies and keeps upskilling to stay aware of the current circumstances|
|Panics with every order placed and obsessively watches his holdings||Has a better hold on emotions as the trader understands the influence emotions like fear and anxiety have on trading|
|Trades with anxiety and tends to stay clueless of what’s going on||Is watchful of the orders placed but does not obsess over it|
|As the trader is on the whims of market movements, high chances the trader might incur losses higher than the amount the trader can afford to lose||Understands that with patience, experience and consistency comes success|
You are the best judge. Which category do you fit in?
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