10 Steps To Achieve Discipline And Consistency In Trading

While a proven trading strategy and a sound risk and money management system are important, psychology is what glues everything together. 

And without the right mindset, trading will become difficult, confusing and challenging. In this tutorial I will share 10 winning mindsets, the kind of information I wish I had when I first started trading. 

1. Trade your set of rules, not your impulses! 

Things to know:

• Impulsive trading
• Common mistake: Trading your impulses
• How to fix impulsive trading
• Trade your plan

Impulsive trading

Impulsive trading is a common psychological mistake that all traders struggle with. And more often than not, those impulsive trades turn out to be losers. 

This isn’t surprising, though, when you consider that an impulsive decision is one without a plan. Not having a plan is perhaps the biggest factor which leads to impulsive trading. 

The reality is that it’s so easy to get caught up in the market’s movement. 

Common mistake: Trading your impulses

Instead of seeing the potential risk of not following your rules, you only see opportunities passing you by. And that’s a dangerous way to view the market. 

How to fix impulsive trading

The solution is to plan your trade so you can trade your plan. By planning your trade in advance, you are setting the ground rules, as well as your limits. 

Trade your plan

If you know what you are looking for and how you plan to act if the market does what you anticipate, you will be able to be objective and stand aside from the fear/greed cycle. 

2. Winning in the markets is a function of habits, unfortunately, so is losing! 

Things to know:

• Trading bad habits
• An example of bad trading habit
• Remove bad habits
• Good trading habits

Trading bad habits

Making money trading is simply a matter of repeating the same effective steps time after time. It’s all about keeping good habits. 

But the opposite is true, is you have bad habits. Every trader has his own bad habits that may be holding him back from trading success. 

An example of bad trading habit 

• Is failing to manage your trading risk.
• Revenge trading after taking a loss. 
• Jumping from one system to another. 
• Sticking to your trading plan when it’s proving a failure.
• Getting emotional and impatient. 

Remove bad habits

This is something you have to figure out for yourself, to find your bad habits, your own Weaknesses and replace them with good habits. 

Remember, even if you cannot control the market, you can control your own behavior. 

Good trading habits

Good trading habits include keeping: 

• Balanced schedule and lifestyle
• Being disciplined 
• Avoiding big risks
• Keeping a trading journal 
• Constantly adjusting and learning 

Successful people, not just traders, don’t attain success by luck alone. They have consciously adopted some good habits that helped them to become successful. 

3. Trade often to minimize the impact of any single losing trade and to build skills 

Things to know:

• Trading reality
• Trading mindset

Trading reality

Trading may seem simple on the surface, but it’s hard to implement your knowledge in live market conditions. 

Every day, every trend, every pullback is different; nothing looks exactly the same as it did in the textbook examples.To get proficient at implementing a method, you need to practice, a lot. 

Like in sports, when you do drills to create muscle memory, in trading, you need to trade often to build skills and refine your strategy. And you need to trade small. 

Trading mindset

From a purely psychological standpoint, it is essential to minimize the potential impact that a losing trade may have on your account balance. If you lose big on a single trade, it will affect you. 

But if you limit the amount of capital you risk on a single trade, it won’t hurt at all. You can pick yourself up easily and move on to the next trade. It’s much easier to take a loss when the real impact on your account is minimal. 

4. Keep your size small 

Things to know:

• Risk of ruin
• Keep your risk low
• Decrease the emotional effect by lowering your trade size

Risk of ruin

To reduce the risk of ruin, to reduce emotional involvement and to give you the chance to learn from your mistakes without major consequences the risk of ruin is the probability that you’ll lose, so much money you can no longer continue trading. 

If you have capital, you are in the trading game but if you don’t, you are out. Especially when learning how to trade consistently, keep your risk low. 

Keep your risk low

Even when you are getting good, keep it low because you will have losing periods and when you do, you want to absorb them well and not take big chunks out of your account. 

Decrease the emotional effect by lowering your trade size Trading without emotion is easier said than done, let’s face it. Many of us traders are emotional and reactionary, and we are affected on a daily basis by fear and greed. 

If you have a 10.000 USD account and you risk 1.000 USD on each trade, it only takes 10 losing trades to be out of the game.

I’ve been there, you’ve been there. When you trade big and you’re in a losing position, you get discouraged every time the market moves another point against your position. 

That’s why one of the easiest ways to decrease this emotional effect on our trades is to lower our trade size. In this way, even if the trade doesn’t go as expected, you get the chance to learn from your mistakes without major consequences. 

5. Being a trader is ultimately an act of competing against yourself 

Things to know:

• Self-improvement
• Self-review
• Find your weaknesses

Self-improvement

It's about self-improvement: 

• Being better than you were the day before. 
• Being a good trader means being consistent over the long-run.
• This means being diligent, learning from your mistakes.
• keeping emotions in check. 
• Stay within your risk tolerance and if you don't know something, learn about it.

The only way to become a better trader is through practice. But practicing isn't enough. 

It's only the first step in the three-step process: 

• Practicing 
• Reviewing 
• Adapting 

That will enable you to dramatically improve your trading skills. 

Self-review

The self-review process is very important and often neglected by most of us. This involves looking at all your trades and actions and emotions for the day and assessing, how well you followed your trading plan on each. 

Find your weaknesses

• If you took lots of trades that weren't part of your trading plan, that is a problem. 
• If you looked at the chart for the day and saw trades that you were supposed to take but didn't, that is also a problem.

Look for problems or areas of improvement within you and the strategy itself. 

6. If when you lose on a trade, you learn from your mistakes

Things to know:

• Motivation problems
• Solution

Motivation problems

And it motivates you to work even harder, you’re on the right track! It can be hard to maintain your motivation, particularly when you’ve had a bad trading period or feel that you are not advancing.

as quickly as you’d like or when you have a small account and no matter, what you do it seems like it’s not worth all the effort. I always keep my mistakes and lessons learnt in front of my screen while trading. 

Because, we as traders, tend to commit the same mistakes every time. 

Solution

Having a list with the mistakes made right in front of your eyes every day, reinforces positive habits and ensures that you avoid repeating those mistakes. 

7. Trading opportunities are endless, there's always another one coming 

Don’t get attached to any single trade. Do not become emotionally involved in one single trade. Trading must not be about a single trade, although for most of us it can be discouraging when we plan a trade, apply our entire logical plan, and then find out that the market does not agree.

It is a matter of training yourself to accept that not every trade can be a winning trade, and that you must accept small losses gracefully and move to the next trade. 

And you must allow opportunities to come to you and never chase a market. If you miss an entry, so be it. There’s another one just around the corner. 

8. Don't focus on the individual fluctuations in your account, winners or losers

Things to know:

• Focus on long term results
• Aim long term

Focus on long term results

What count are your long-term results? You will inevitably have periods with considerable gains and, at other times, significant losses. 

Of course, it’s easy to become excited and overly eager to make more trades, when favorable price movements benefit your trading account. 

Aim long term

And there will also be days when the market completely turns against you. A consistent trader: 

• Understands that neither extreme will last forever.
• Enduring through the good and the bad, is a skill that enables you to learn and grow. 
• One trade (winner or loser) shouldn’t matter. 
• Don’t make any one trade matter by risking too much money or by feeling desperate to win. 
• Pace yourself to win the long-distance trading race. 
• Your goal is to win long-term. 
• You aim for consistency. 

9. A good trader is someone who recognizes that cannot predict the markets 

The market is essentially a marketplace for traders and investors, driven by supply and demand. There are thousands of factors that come into play. We cannot know for certain what will happen tomorrow. 

When we have several successful trades in row, we get that feeling that we invincible, that we know what the market will do next. We learned to predict the price movement. But too much pride often leads to disaster. Pride can be a competitive emotion.

Thinking we can predict the markets can be dangerous. For example, a very common misconception is that support or resistance will hold, or that a break of these levels will cause a substantial breakout. 

Making assumptions that a breakout will occur or that a level will hold off a further move is an attempt to predict the market. Rather, you should watch what occurs around these levels and then enter as momentum moves in one direction or the other. 

By doing so, we are not predicting that something will occur. Instead, we enter into the current price flow. This makes trading "matter of fact" as opposed to emotional. 

10. To get long term consistency you must create your own system by absorbing what is useful

Discarding what isn’t, and adding what is uniquely your own. Think of trading as continuing education. You need to remain focused on learning each day. 

It is important to remember that understanding the market is an ongoing process. Having a growth mindset is key to being successful. When it comes to trading we often develop our views from the opinions of others. 

This is fine to start, but as we continue to develop we must be able to accept that something we once thought was right, may actually be wrong. It is important to always have a critical eye. 

And you must find your own style, by implementing what’s right for you and discarding the tools or information that don’t align with your own style. 

Final words

In this article, I told you about 10 mistakes that you should avoid in trading, dear traders. I hope you have enjoyed this tutorial and that it is useful for you to be able to remember these points in your transactions and reduce your losses as much as possible.

Until next time.

About Author Milad Ghanbari is a trader and also loves writing. He created the MiladFX to help traders. And provides online tools, and tutorials needed for traders for free here, to support their colleagues in the field and guide them, to do more successful trades.