Top Ten Reasons Why Traders Lose Their Trading Discipline

Losing trading discipline is not a trading problem. It is the common result of a number of trading-related problems. Here are the most common sources of loss of discipline, culled from my work with traders:

  1. Environmental distractions and boredom cause a lack of focus.
  2. Fatigue and mental overload create a loss of concentration.
  3. Overconfidence follows a string of successes.
  4. Unwillingness to accept losses, leading to alterations of trade plans after the trade has gone into the red.
  5. Loss of confidence in one’s trading plan/strategy because it has not been adequately tested and battle-tested.
  6. Personality traits that lead to impulsiveness and low frustration tolerance in stressful situations.
  7. Situational performance pressures, such as trading slumps and increased personal expenses, that change how traders trade (putting P/L ahead of making good trades).
  8. Trading positions that are excessive for the account size, created exaggerated P/L swings and emotional reactions.
  9. Not having a clearly defined trading plan/strategy in the first place.
  10. Trading a time frame, style, or market that does not match your talents, skills, risk tolerance and personality.

Why People Lack Self Discipline

Short Term Gain

A common personality trait is short term gratification. So rather than wait until the student is has experience of trading on a demo account or has completed a trading course he would start live trading straight away, the temptation of the potential to make easy money, too great. Or they have completed a course and the demo and then find themselves hurting over a loss. The student who does this tends to think in terms of the immediate pleasure pain they will experience rather than think about the bigger picture.

Set yourself long term trading goals and visualize the emotions, benefits, rewards and satisfaction as a result of accomplishing these goals.

This will drive and motivate you and focus the mind on achieving those goals taking your focus away from immediate and destructive short term gains. By learning to mentally project yourself into the future this way this will help to develop self-discipline and motivate you to do the things you need to do to succeed.

Remember, what you do today will affect the rest of your life.


Seeking Pleasure/Avoiding Pain

How you perceive both pleasure and pain has a dramatic impact on how self disciplined you are or will become. As previously discussed, most traders are pain averse which causes adverse emotional trading.

Self-discipline is about being in control by organising when you should allow yourself to feel pleasure or pain. To achieve this, start doing things that you dislike that make you feel uncomfortable, first. Then give yourself a reward by doing things you like afterwards. By repeating this exercise on a daily basis you will learn to not avoid doing things and you will develop the discipline to do painful things more easily. In trading you will develop your self to follow the rules of your trading plan even though you may incur losses.

It is important to have a balance of pleasure and pain to be able to have a disciplined life. Too much pain and you become immobilized as you have no reward to motivate you. Too much pleasure and you become immobilized as you have no incentive to experience the pain. Previous bad experiences will have an effect on how well you adapt to a disciplined lifestyle. Bad experiences in the past with a particular task will make it harder for you to be disciplined due to the extra pain of the past. By combining both pleasure and pain emotions with the task you will have a more balanced approach to the task by maintaining self discipline through control of these emotions. Starting a task might be considered painful but thinking about what it feels like to have completed the task will motivate you to starting the task.



Procrastination relates to the avoidance of pain. This appears sometimes with regards to not having the information required to complete a task and the feeling that the task will therefore, be a difficult and painful process. By focusing on the benefits of completing the task rather than the pain, you will perceive the task more positively which will motivate you to get on with it. By focusing on the future pleasure you will overcome the present pain of the task.



People use avoidance behavior to prevent themselves from feeling the pain of doing something they need to do which they find uncomfortable. Other activities are often used to replace the activity they should be doing thus avoiding the pain. These avoidance behaviors are used out of fear of the other task they should be completing and may include fear of rejection, fear of failure or even success. They are irrational fears that are learnt from past life experiences which prevents self-discipline as it stops the action required to complete the task. By removing this fear by reframing the activity and focusing on future benefits you unblock the path to action of the task and avoidance behavior becomes a thing of the past.


Bad Habits

Habits are reoccurring mental behaviors, such as the way you think, or physical behaviors such as the way you act. The habits are either good, they enrich your life, or bad they have a negative impact on your life. Whilst the good habits will help you succeed in some areas of your life, the bad habits will prevent you from succeeding in some areas of your life.

Self-discipline is about changing your behavior and by changing your bad habits you will become more self-disciplined. Habits are automatic and are controlled by the subconscious mind. To change these habits we have to be consciously aware of these habits and start thinking about why you do them. However, habits are familiar and comfortable and therefore pleasurable to us and become a part of who we are as people. Taking them away creates a sense of anxiety and pain resulting in psychological discomfort and we often return to the same habit. When this occurs the conscious mind gives in the subconscious and we feel powerless to resist.

Habits are often formed out of pain avoidance behavior. By applying a balance of punishment to bad behavior and rewards to good behavior we can begin to change the bad behaviors whilst encouraging the good behaviors.


How to Become Self-Disciplined

Learning how to be disciplined takes time and patience and a lot of effort to begin with. But every act of self-discipline will also develop your self-esteem and confidence –vital for trading success.

Start with small things such as the cleanliness and orderliness of your environment. Learning self-discipline in the little things of life prepares the way for big successes. Those who are undisciplined in small matters will likely be undisciplined in more important issues.


As you become more self-disciplined you may feel like you are struggling to achieve your goals and objectives. By seeing the ‘pain’ that comes from a more disciplined lifestyle as something other than pain you will begin to develop a new more positive perspective. By seeing the bigger picture you will begin to see your pain as supporting your goals and objectives. By putting things into another context, eg negative to positive, you will find yourself more empowered and your goals and objectives more easily achievable. Reframing also helps to deal with learning outcomes. Learn to see mistakes as a learning experience rather than a personal loss or set-back.


Mental Visualisation

The mind tends to think about the immediate time rather than the future. This is a natural innate survival mechanism to help us be aware of danger in the wild. Because of this the mind tends to focus on the pain more than future benefits of completing a task. Shifting the focus from the immediate to the future helps to reframe a task. The best way to achieve this is through the process of visualisation.

The stronger you can visualise, feel the emotion of and hear the noises of achieving a task or goal and the related benefits and rewards, the stronger our motivation becomes to completing the task and reaching the goal. By shifting the focus of the pain to the pleasure, a task can become a pleasurable thing to do and our minds are much more focused to achieve our goals. By changing your thoughts you begin to change your feelings which will in-turn change your actions.


Punishment and Rewards

To change bad habits and encourage good life enriching behavior the key is to be balanced and consistent and to have the correct level of punishment and reward for each behavior. By overcoming the pain of changing the behavior you are able to generate good behavior such as self discipline. A mixture of reward and punishment is necessary for changing bad habits. If rewards are deferred or intermittent for the changed behavior, they will increase the value of the reward and become a higher incentive than if the reward was given every time.



Self-discipline is a requirement to trade successfully, especially as the nature of the trading environment is unlike the controlled environment we live our daily lives. Many of these techniques in developing self-discipline are not dissimilar from psychological techniques on how to trade successfully. But by identifying the issues of self-discipline specifically we are able to use these to develop specific skills to self-discipline itself and should be mastered before attempting to develop the psychological trading skills. By developing discipline in your everyday life in the controllable environment you are more likely to succeed in developing healthy psychological skills and the necessary discipline in a much more difficult uncontrollable environment as characterized by the market.



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