2022 was one of the most undisciplined years of my trading career, but I’m determined to change that this year.
And the main aspect of my trading I’d like to change in 2023 is being more disciplined.
After all, building a solid strategy means nothing if you don’t have the discipline to execute it consistently.
But what do I mean by discipline exactly?
In the stock market, discipline can mean many things. For example…
- The ability to pick and choose the best setups to trade
- Consistently following your rules
- Sticking to your price targets
- Having clear entry and exit plans
- Avoiding FOMO (not forcing plays you shouldn’t be trading)
- No chasing!
- Cutting losses (and taking profits) quickly
If you don’t possess these skills, you risk making subpar trades and losing money. (I know this firsthand from my performance last year…)
So, how will I improve my discipline? And what specific steps can YOU take to do the same?
Keep reading and I’ll show you…
Why Discipline is Critical
Developing a winning strategy is difficult — but executing your game plan with discipline is even more challenging.
Take me, for example…
I had a disappointing year in 2022. Sure, bear market price action made it difficult to find my bread-and-butter momentum setups…
But ultimately, my lackluster performance came down to a lack of discipline.
At certain points, I allowed my emotions to cloud my judgment. I made poor decisions…
Like when I held Tesla Inc. (NASDAQ: TSLA) puts way too far into a bear market rally and lost around $100,000!
Had I been more focused on discipline during that trade, I would’ve cut my losses much earlier.
Instead, I stubbornly held on without seeing that I was too early to the trade.
This year, I’m already working toward righting those wrongs…
By staying disciplined and focusing on the best setups only, I was able to nail an 83% win on Rivian Inc. (NASDAQ: RIVN) last week!
This is why it’s all about discipline. You’ve gotta keep your eye on the prize and your mind on your goals.
But how specifically can traders work to stay disciplined?
4 Simple Tips for Staying Disciplined
Here are four simple steps that have helped me stay disciplined in the past…
Tip #1: Set Higher Standards for Your Trades
I’ve spoken before about the dangers of overtrading (a classic symptom of undisciplined traders).
Here’s the truth…
If you’re trading every day, you’re probably trading too much. You need to set higher standards for the plays you make.
There aren’t many strategies that — when executed with discipline — bring about multiple setups every day.
Start getting comfortable passing on trades. Don’t feel like you have to enter every setup you hear about.
The ability to pick and choose the best setups is a major pillar of being a disciplined trader.
Tip #2: Never Send Market Orders
When traders get overexuberant, they tend to mash the ‘market order’ button.
They let the importance of cost basis move back in their minds. DO NOT make this mistake.
Instead, ALWAYS send limit orders. Pick the price at which you’re willing to enter the trade and STICK TO IT.
By sending limit orders, you can name your price. And this should help you avoid the temptation to force the trade at an arbitrary price point.
Tip #3: Focus on Building Your Watchlist
A major component of forcing trades is venturing outside your watchlist.
Don’t do this, especially in the kind of market we’re currently dealing with.
You’ve built your watchlist for a reason — you understand the psychology of the charts you’re tracking.
That doesn’t mean you should never add new names to your trading rotation…
But you shouldn’t put a trade on an unfamiliar chart just because you heard about it on social media.
Tip #4: Don’t Chase Trade Alerts
I’ve said it before and I’ll say it again … you should NEVER chase trade alerts!
I hate to see students lose money by following last-minute alerts with no research of their own.
And in bear markets (like this one), I see alert-chasing begin to happen more and more.
Unless it’s a five-star setup on a stock you’re already watching — let most trade alerts go in one ear and out the other.
For me, discipline is the name of the game in 2023.
But you might need to focus on a different area…
That’s why I recommend you take a long, hard look at your recent performance and focus on the aspects of your trading that need improvement.