5 Common Discipline Mistakes Traders Make


Trading with money they can’t afford to lose:

Most active traders know that they should not be using money they might possibly need for other life purposes to fund their trading account. However, I know many of them commit this cardinal trading sin because they think they can get rich quick or they don’t really think they will lose any money. You really need to have the discipline to consciously remind yourself that if you are using money to trade that you really shouldn’t lose than you are essentially gambling and are setting yourself up for a whole host of emotionally fueled trading mistakes.

Not having a defined trading plan or method:

If I were to ask you “what is your trading plan”, what would you say? If you cannot decisively answer this question than you have a serious lack of discipline which is going to drain your trading account very quickly. Developing a defined trading plan is not only a benefit to your emotional sanity but it also gets you in the habit of doing things objectively and helps develop your self-discipline. Success in trading is all about self-control and managing your emotions. You need to write out your trading plan when you are away from the markets and then follow this plan as you interact with markets in order to keep your brain in check.

Having a trading plan and not following it:

Having a valid and defined trading plan is essential to trading success but if you are not following the plan you spent so long developing than you might as well throw it out the window. It is extremely easy to think you see something happening in the market that warrants you doing something not consistent with your trading plan. These are the exact behaviors that end up killing traders’ accounts. After the fact you realize that had you just stuck to your objective trading plan you would have been much better off. The emotional anguish and frustration that results from this is often quite intense. Often this cycle is the catalyst for a snow-ball effect of emotional mistakes that can literally lead to you blowing out your trading account very quickly. It requires more discipline to stick to your trading plan than to actually develop one. Read that last sentence again.

Letting winners turn into losers:

Allowing a previously positive trade to turn negative is probably one of the most common mistakes that are a direct result of a lack of discipline in the market. Predicting near-term market direction is not the most difficult skill to become good at. What is difficult though, is taking profits off the table and proper stop-loss placement. Many times traders have un-realistic profit targets that are too far away from their entries. When these targets get missed and the market starts turning back towards the entry point many traders at this point are not thinking logically if they don’t stick to their plan. Often traders will not have moved their stop loss to break even after being up a substantial amount of money. Then when the market gets back to their entry and turns negative they start to hope. Once the hoping starts you might as well start burning your trading account money, because you are about to lose it. Many traders even move their stop losses further away from their entries because they think the market will turn back around in their favor. Sometimes it indeed will, but the point is, if you develop the habit of hoping and moving your stops away from your entry point eventually you are going to get burned really bad and it’s going to essentially nullify all of your previous trading success.


Over trading is a direct result of a discipline deficiency. Generally, over trading is a symptom of numerous other trading mistakes that were a result of a lack of discipline. Not having a trading plan or not following the one you do have leads to over-trading, as does letting winners turn into losers. People usually over-trade as they try to make back money they unexpectedly lost on a previous trade. Even if you are following your trading plan to a T you are going to endure losing trades or even strings of losing trades. In the face of such adversity you must realize that you cannot make irrational trades that deviate from your plan just to try and make back what you just lost. It won’t work, it never works. Your trading plan needs to be played out over a large series of trades for you to see its profitability. If you deviate from this plan by over trading than you are nullifying your edge in the market and might as well go hit the slots in Vegas.

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