The discipline rule

keyYou have to be disciplined to trade successfully; we all know that, and it’s one of the few pieces of trading advice that might apply universally. No matter what your trading style, market, timeframe, risk profile–whatever you do, you have to do it consistently and with discipline. It’s easy to overlook something we hear this often, but the reason this advice is so often repeated is that it really is that important. However, there is one little detail that makes all the difference–if you are going to be disciplined, you must be disciplined all the time.

So you make your trading rules, and you refine those rules. You monitor how they work in real time, and you make adjustments as necessary. Your job is now “simply” to follow those trading rules–do what the rules say always. Again, I’d be willing to bet that every one of you reading this knows what I just said is important, but can you truly say that you are disciplined every moment, in every interaction with the market?

Sometimes you will hear traders say they are “usually disciplined” or they “almost always” follow their trading rules. Wrong. You are either disciplined or you are not–it’s a yes or no thing. If you are disciplined 999 times out of 1,000, but you break discipline that one time, you are not a disciplined trader. There is no halfway, usually, mostly, or almost always–either you are or you aren’t.

This way of thinking is a good reminder because it forces us to be mindful of the damage we can so easily do to ourselves. All it takes is one slip–one trade held too far past the stop, one crazy addition to a losing trade, or one impulsive entry–to undo weeks of disciplined work. Not only can the financial impact be extreme (it’s not that hard to lose a month’s profits in five minutes), but the emotional and behavioral impact can be devastating. Once you’ve opened the door and done something silly, you are much more vulnerable to future mistakes. And, if you make money doing something stupid… well… that’s almost the worst possible thing that can happen to trader because you will do it again, and eventually the bill will come due.

So, that’s it. This is another one of those simple rules that is so easy to overlook: you must be disciplined, and you must be disciplined every day, every minute, every moment, and every interaction with the market. If you are not always disciplined, you do not have the right to call yourself a disciplined trader. Another simple rule, but one that can make all the difference in the world.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.