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The trading mistake you wish you didn’t make: No discipline

Transform your trading strategies with the power of discipline. Our comprehensive training guidelines instill a robust trading mindset, promoting consistent decisions and enhanced trading success.

Source: Bloomberg

Your trading plan is all set, laying out the market you'll trade, the signals that will initiate a position, the stop loss, and the profit-taking points. It seems straightforward, but then reality kicks in. You place a trade when the signal comes, only to watch the market move in the opposite direction and hit your stop loss.

This happens again.

By the third signal, you hesitate, deciding not to open a position to prevent another loss. Of course, this time the market moves in your favour, but you're left on the sidelines, not profiting from the move. Does this ring a bell?

This scenario can be quite common. Once you've got the basics down — not adding to losing trades, using stop-loss orders, and employing a trading plan with proper risk and size management (topics covered in other articles) — you're faced with the toughest part: executing your meticulously planned strategy.

It's one thing to articulate your plan; it's another to execute it in a disciplined manner. Depending on your trading style and habits, the initial hiccups can feel like a sign that you need to change your strategy.

You might find yourself revisiting and altering your plan, even when the initial blueprint could be completely sound.


So, what exactly is discipline? The Oxford English Dictionary defines it as an “orderly or prescribed conduct or pattern of behaviour”, and disciplining as “training that corrects, moulds, or perfects the mental faculties”.

Clarity is a prerequisite as that will explain what is required of yourself, while enforcing is putting it into action on a consistent basis.

The role of discipline in financial markets

Did the European session pass without a single trigger? In such situations, if your plan is designed to avoid the market-moving US session, then discipline necessitates that you sideline it and wait for sessions that align with your plan.

What if there's a lack of volatility in the specific product you're trading, persisting for weeks on end? This might tempt you to switch to a different market. However, self-control comes into play here. It urges you to adhere to the markets in your plan, the ones you chose with considerable thought, and to resist the urge to venture into unfamiliar territories where your understanding might be limited.

Source: Bloomberg

The importance of discipline in trading

Why is discipline so important? If you knew in hindsight that a particular strategy succeeds 65% of the time during a specific period, you’d need to initiate every time with the correct parameters to achieve that figure. Any profitable trades missed due to a lack of discipline will drop that figure. Subsequently, it will decrease the net amount you could have earned while trading during that period.

Trading mindset and its relation to discipline

Understanding the importance of discipline is also contingent on why you started trading in the first place. Did you start to get rich quickly? If so, this might explain why discipline isn’t your strong suit initially. Trading success usually occurs over time, even if you start with a decent string of good trades.

Assuming a short-term mindset, believing that discipline won’t matter since you're not in it for the long haul, can lead to reckless trades. These trades may disregard any plan or rules set in place, possibly resulting in large losses when the market turns. This turn of events can happen more frequently than new traders anticipate. It can even surprise those that are quite experienced.

Shifting from a short-term mentality to a long-run view will illuminate how discipline plays a crucial role. It is key to ensuring long-term success that'll smooth any bumps on your trading journey.

Source: Bloomberg

Discipline, profit, and trading plan compliance

It’s crucial that a position closed in profit was done correctly, in accordance with your trading plan and risk management. Otherwise, you'll be aiming for a short-term win at any cost, ignoring your strategy. This could eventually cost you dearly. Gains achieved incorrectly, resulting in a loss of discipline on the trading front, shouldn't be celebrated but discouraged.

Discipline and self-control in trade placement

Self-control doesn't just mean placing a trade when required. More importantly, it means not placing one when your plan hasn't indicated a trigger, even if you're getting impatient. If you feel the trading strategy tested over a longer period isn't ideal, the issue lies in changing the plan. Under no circumstance should it result in a deviation from the plan, leading to an undisciplined approach.

Source: Bloomberg

What if you find yourself lacking in discipline?

Just like trust, discipline is not a commodity that can be bought or sold. The catalyst to nurture it may come in the form of a motivational speech, a pivotal event, or even this article. However, the real work lies in self-training, building willpower, and fine-tuning yourself to adhere strictly to a plan. This process effectively eliminates randomness.

Discipline takes on a crucial role, especially at the very start of one's trading journey. At this stage, we haven't yet reaped the rewards of discipline nor experienced a significant loss due to a lack of it. Equating discipline with pleasant outcomes and the lack thereof with negative consequences is vital.

For those unseasoned in trading, it's necessary to recall personal experiences where discipline played a key role in averting loss or where restraint led to significant gains. It's also crucial to mentally distinguish between 'winging it' and achieving long-term success.

Patience, or the lack thereof, is another factor to consider. Market calm may require a higher degree of patience, particularly if you're itching to make a trade. Conversely, during periods of heightened market activity, your trading plan might call for successive trades with little interruption, which might feel overwhelming for a more passive personality.

Source: Bloomberg

Boosting discipline through trading exercises

Addressing discipline on a personal level is certainly achievable, but it may require patience and time for those of us who aren't naturally inclined or formally trained. In this section, we offer some guidance on potentially bolstering that discipline from a trading perspective.

Let's remember, discipline in trading means sticking to the plan, not altering it on the fly or making it up as you go along. This involves dedicating a specific amount of time or a set number of trades to a strategy, even if it's on a demo account.

A useful approach is to mentally differentiate between the time to trade, which demands absolute discipline, and the time to analyse your trading plan for potential changes.

These two periods should not overlap. In fact, more time should be devoted to meticulously executing the plan, thereby testing the strategy's durability over time.

Starting with a demo account is key. Here, you should strive to exhibit discipline in every aspect of trading. It's crucial to keep a record of when you deviate from the plan. Without this, you may prematurely think you're ready for live trading.

Remember, a demo account is not just about monitoring if you end in the green or the red. It's about assessing whether your performance aligns with your plan or if it's simply down to chance.


These guidelines will help cultivate discipline, improve decision-making, and ultimately enhance your trading performance.

  1. Trading time-out: Begin with a fifteen-minute period where you monitor the market but refrain from initiating any trades, regardless of the movement or temptation. Be sure to actively watch the screen; this is not a break. You are trading your plan, it just hasn't given you the signal yet.

    Repeat this exercise twice during the Asian, European, and US sessions.
  2. Time with a trade open: This part becomes more challenging when you have an open position, as this is when trading emotions can surge. Here, the exercise is time-based. You open a position and hold it for one hour, regardless of whether it's in profit or loss, to discipline yourself to maintain a position.

    2.1. Time with a short-term trade open: This exercise is for those who aren't trigger-happy and aren't accustomed to placing trades in quick succession. Again, it's a time-based exercise, but holding the trade for a much shorter 15 seconds, closing it, and opening another trade five seconds later again for 15 seconds. Carry out four trades in a row that are five seconds apart.

    2.2. Time with a position in profit: We have a tendency to take profit quickly, so for this exercise it's crucial that when a trade goes into profit, you hold it for three hours. This is even if you see your profits at times decrease. This will help in holding onto gains for a longer period of time. If the trade goes into loss, then proceed to the next part.

    2.3. Time with a position in loss: The best traders are patient with gains and impatient with losses. When a position goes into loss, put a time limit of no more than one minute where it’s wholly in loss during that time. Close it if it stays in loss for over a minute. In other words, when in profit, keep open for three hours, and in loss, for only one minute.
  3. Opening and closing trades: This exercise will help remove the emotional attachment to trades. Open and close six trades, three of them long positions and three short, to dispel any bias towards either type.
  4. Long only positions: We naturally tend to be biased towards buy positions. For this exercise, dedicate a session to looking for only long opportunities, even if you predict the market will drop.

    4.1. Short only positions: Reverse the previous exercise by only initiating short positions, regardless of whether the market is rangebound or trending.
  5. Single position trading: For the above exercises, only initiate one position at a time, and never add to the same side. For instance, place a buy trade and only place another buy or sell trade after you have closed your initial trade. Avoid holding a buy and sell position simultaneously, nor two of the same type.

    5.1. Single averaging-in: Once you’ve disciplined yourself to avoid averaging-in entirely, consider adding to your position only once. This way you’re holding either two buy positions or two sell ones, aiming to average into a side for a longer-term time frame.
  6. One market only: Even if you think you’re proficient in multiple markets, slow movement in the product you’re trading can tempt many into looking elsewhere for volatility. However, your trading plan may not allow for that. As a result, when practising, stick with only one product for all the above-mentioned exercises.

Source: Bloomberg

Blending training exercises with live trading

Choose a different one of the above to work solely on discipline, and then you can (where applicable) combine two of them and work on them at the same time. It’ll never be the same as a live trade, but it will help bridge the gap far more quickly once you’re no longer trading in a simulated environment.

After you’ve started placing real trades, it won’t hurt to continue doing exercises on each of the above on our demo account to break free from the habits that pose even the slightest risk to a disciplined trader.

In the end, remember that while you may not be trading the best trading plan at any given point in time, at least you know you’re disciplined enough to follow through on it when it does present itself.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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