Building Discipline and Self-Control in Share Trading

In this article, we will discuss

• Significance of Discipline in Market
• Key Areas of Disciplinary and Self-control Measures
• Developing Effective Discipline and Self-control in Trading
• Final Words
• Frequently Asked Questions

If you are into share trading, you might know the importance of discipline and self-control. Also, you will want to know how much it can help you to become a better trader. You must have observed that people do not fail just because they are not good traders but because they lack discipline.

Here in this article, we will deep dive into some of the important strategies helping you build discipline, enhance self-control and help you become a better trader. Read along to get further insights about the same.

Significance of Discipline in Market

As we all know discipline is required in almost each and every field to become successful in it. Similarly, it is necessary for a trader or an investor to maintain a rational and disciplined approach. For instance, it can be maintaining constancy, keeping self-control, holding on to your trading plan, etc.

Maintaining a trading plan is very crucial if you are looking forward to being a successful trader. A trading plan refers to all the processes such as carrying out research, trade executions, performance observation and planning out a good point of exit to book maximum gains.

Hence having an effective share trading plan is extremely important and you are not going to execute successful trades even with good opportunities if you are not disciplined. Indiscipline can lead to not following the plan diligently, ignoring the trading strategies and opening up trades without conducting sufficient research. Doing these things can result in massive losses for you.

Key Areas of Disciplinary and Self-control Measures

Here are some of the key disciplinary measures that you can work on to boost your trading returns:

Self-control on the Sense of Greed and Fear

The sense of greed and fear are amongst the most significant emotions which drive traders and the overall market towards a specific direction. The stock prices tend to rise when the majority of investors feel unrealistically optimistic.

Similarly, the stock price can also plunge if there is a sense of fear among the existing shareholders. Such fear can be the outcome of several factors such as a revenue drop published in a company's earnings reports, some negative news on a company's operations, etc.

These types of emotions result in irrational decisions, so it’s essential you keep your emotions in check.

Avoid Panic Selling

Panic selling is also one of the common practices noticed among investors. It is what you must work on especially if you are new in share trading. It is a kind of situation when a trader sells off his/her stakes when the price starts declining due to a sudden change of mind. An irrational panic sale can lead you to book massive losses.

Therefore it is always recommended to conduct a thorough analysis of the stock before buying the same. If you are convinced that the stock is a good investment choice, you avoid panic selling and stick to your decision.

Avoid Revenge Trading

Another common but unhealthy practice prevalent among traders is revenge trading. It is specially referred to as a situation when the trader enters into one or more research-lacking or poorly timed trades.

For instance, suppose you have lost ₹500 in a long TCS trade and now you are looking forward to making it up by attempting a short TCS trade. This decision can lead to even more losses. As a disciplined trader, you should conduct thorough research before entering into a trade.

Developing Effective Discipline and Self-control in Trading

Here are some strategies which might help you to boost your discipline and self-control as a trader:

Strategy 1: Take your time to learn about the stock market and various insights in detail before starting with your share trading journey. Learning more can provide you with deeper insights regarding the whole process.

Strategy 2: It is a good idea to have a mentor with sufficient experience and exposure to the stock market. Mentorship from such a person can help you understand the practicality of trading in various aspects and help you improve as a trader.

Strategy 3: Starting your career on the trading floor can help you boost your trading capabilities to a large extent. People present on the floor have decades of trading experience and understand the market sentiment well.

Strategy 4: Maintaining a trading journal can help you to grow as a trader and improve your trading skills. In a trade journal, simply jot down all the key aspects of trade such as the entry and exit points, possible or past outcomes from trades and catalysts in a trade.

Final Words

The above-discussed strategies will no doubt help you become a better trader. These self-control and disciplinary methods are internal and are totally under your will and control. However, there are other external factors which can impact your share trading journey. But over the long term, if you continue to practise disciplinary measures, they will help you to become a better trader.

Frequently Asked Questions

1. What are some of the common biases to work on to be a better trader?

Ans. Some of the most common biases to work on include loss aversion bias, anchoring, overconfidence and optimism.

2. What are some of the best soft skills to boost your discipline?

Ans. Some of the best soft skills that can help you to become a more disciplined trader include resilience, decision-making ability, patience, pressure handling, etc.

3. Is there any psychological method to enhance trading?

Ans. Yes, you can enhance your trading returns by implementing a psychological technique known as part negotiation. If you are experiencing any sort of distraction, you can practise this. Often, there can be confusion within yourself like there can be one voice telling you to skip a trade while another part of you tells you to go for it. In such situations, part negotiations can help you make a better decision.

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847