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When I watch student traders trade, they
tend to sit very patiently and explain to me what they are seeing on the
chart in front of them. When they see a valid setup come along, they can
quite happily tell me what the setup is and how they plan to trade it,
and subsequently they will execute the trade accordingly. When the same
student is trading alone, they start taking all sorts of off-plan
trades, setups that aren’t really setups at all. It seems that the
difference when trading alone, is that the trader suddenly has no
accountability. If they have someone looking over their shoulder keeping
them in check, everything is fine. They know that if they take an
off-plan trade then they will have to explain to me why they did so when
it all goes horribly wrong. Trading at home alone, the trader is
accountable only to themselves, and they are probably not going to give
themselves the same hard time I would if they didn’t follow their
trading plan to the letter!
So it seems that one of the benefits of
trading for a living, that independence from the boss, can actually be a
hindrance at times. Short of hiring a manager to stand watch over them,
what can a trader do to overcome this lack of accountability in their
trading? One method I recommend is to give a running commentary out loud
throughout the trading session, as if talking to a mentor. Explain what
you are seeing on the chart, where you think a trade is setting up and
why, how you will enter, how you will manage the trade, and where you
will be exiting wherever the price subsequently goes. When talking out
loud you use a different part of the brain than when simply thinking to
yourself, and that can have surprising consequences; it’s easy to talk
yourself into a trade that you want to take even though you know it’s
not quite right, but talk through it out loud and you’ll hear yourself
making excuses and quickly see the error you are about to commit. I know
talking to yourself sounds a little odd, but it really works.
Another option for making yourself more
accountable for your trades is to join a chat room. There are loads of
them about, plenty of free ones as well as some paid ones which call
trades in real time (I wouldn’t recommend those by the way, they are
often run by people front running their own calls). If you find a decent
room and commit yourself to calling your trades in real time, knowing
that you will have to explain to the room exactly why you just took that
really stupid trade will really make you think twice about taking it in
the first place.
These are two simple ways of making
yourself more accountable for your trades and therefore enforcing more
discipline. There are many more interesting ways of increasing
discipline as a personal skill, and I hope this article will have given
you some ideas to start developing your own methods.
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