Trading Discipline Is Not About Willpower
Being disciplined in your trading is effortless when you believe in your methods.
Start to consider yourself to be ‘a disciple of a belief system’.
Past performance is no indicator of future profits, and from today forward you now practice adhering to certain trading thresholds, even when others may find such a circumstance to be difficult or inconvenient to do so.
This type of discipline is rooted in a set of beliefs or a philosophy, and it is not at all the same as teeth-gritting willpower.
In fact, if FEELS GOOD to follow your beliefs!
When someone is ‘disciplined’ in this way, they simply have a clear understanding of what they believe and why they believe it.
The scientific method — the approach to thinking that brought mankind out of the dark ages, is based on this kind of belief system based on evidence.
All successful traders have a set of principles or guidelines that they follow, and they are able to apply those principles to different situations in their trade.
This means that they are not acting with strain, stress and effort, but rather they are acting out of an easeful and logical application of their belief system.
Let’s say that a trader has the following disciplined approach to risk management…
They have a set of principles that they follow to help them manage their risk exposure when planning position size, entry levels and protective stops.
They adhere to those principle, even when it might mean taking a loss or putting in additional work and effort.
The Ultimate Crypto Risk Control Rule
For example, the trader may follow the Ultimate Risk Control Rule, and that they will start with a small commitment of about 1% of their account balance on any single crypto — and they are only willing to risk losing 15% of this investment!
This means that if they have a $10,000 trading account, they will never invest more than $100 into any one crypto spot holding — and they will only risk $15 of that $100 position.
Even if they feel confident in a particular trade, they will not risk more than this amount until after the trade has proven correct.
This type of discipline is not just about willpower or resisting the temptation to take on more risk. There is a pre-planned time to increase exposure without increasing risk, and it is rooted in a logical application of the proven risk control rules.
If the trader were to deviate from this principle, they would be acting in a way that is illogical and inconsistent with their belief system.
Pro traders have learned by painful experience to place a high value on risk management and the preservation of capital.
When you are able to limit your losses it’s easier to maintain a consistent approach to trading.