• Unwillingness to accept losses (loss aversion/ego) is a common problem. If you are not willing to take a loss then you are always likely to run one and to move stops. Accepting losses and dealing with them effectively is key to disciplined trading.

• Taking on too much risk. High risk creates higher stress, and higher stress creates stronger anxiety and worry; all this weighs down badly on your decision-making ability. Excessive positions also carry with them the potential for huge painful losses that no one wants to take. So taking appropriate risk is a key necessity of, as well as component in, disciplined trading.

• Greed is another pitfall. Wanting too much too soon, or trying to make every trade a big winner, are common. Again the key is to assess your strategy, accept that as traders we are in and out of the market over our desired time frame, whilst the market moves both before and after we enter and exit. Our aim is to capture profits within the time frame of our system.

• Fear. This can come in many forms and may lead to you either not entering the market or getting out too late or too early. Fear of loss, fear of missing out, fear of leaving money on the table are just three possibilities. Managing trading position size, accepting losses as a part of trading, and having confidence in your trading strategy and your own trading ability will all help to reduce or eliminate any fears.


• Situational pressures – slumps, financial pressures, stress outside of trading. Sometimes trading does not go to plan or you get a period of drawdown that might be extended in time or deep in cost. Likewise, sometimes life outside of trading presents challenges that can have an impact on you. Where these conditions arise, your mindset can often be affected; and, as a result, your behaviours can become less disciplined. A typical example is where traders are having financial difficulties either in their trading or outside of work and they start to get into desperation-mode. Their only goal becomes to make money in any way possible, which immediately moves them away from the discipline of sticking to their strategy.


• Some people are by nature not rule-driven, and may live rather by the rebellious axiom that ‘rules are there to be broken’. Others may be impulsive, whilst still others may be sensation-seekers who love excitement and high level risk-taking. In all of these cases there is a potential challenge to discipline, so the key issues become getting the best match of the trader to a trading style that most accommodates their personality and/or working with them to make some changes in their natural approach (the second of these is by far the hardest, especially if the behaviours are well ingrained).

Practical Strategy: Know Your Dark Side – Find the Force

“Face your deficiencies and acknowledge them. But do not let them master you.” Helen Keller

Go through the aforementioned list and identify your trading strengths. Now go through and identify your weaknesses – your dark side! – consider the frequency of which these events occur and the magnitude of them (the impact) and then rank them in order of priority to address.

What do you need to do to work on these?

You will find many of these dark side behaviours and their possible solutions in the rest of Part Two.

Ideal Trading State

I have heard many people say that they would like to trade with no emotion – would you? If you said yes, then hopefully I will persuade to change your mind!

I know exactly what they and you mean when they say this, and it is not that they want to have no emotion at all. What they are really trying to articulate is that they want to have no ‘negative’ emotion – fear, anger, greed, etc.

Some states are conducive to peak performance trading and some are not. Some states hinder optimal trading performance from taking place. Trying to do something when you are not in the right state is like putting your foot on the accelerator when the car is not in gear – lots of revs, but you don’t go anywhere!

Most people have heard of the phrase ‘being in the zone’ or ‘in the flow’. These are phrases that have been made popular by performance psychologists to describe people who are performing at their peak. When people achieve such states they will have accessed and be in their Ideal Performance State or, in trading terms, Ideal Trading State. Getting into your ITS is important because it enables you to fully access your trading talent and to perform to your maximum potential.

When I talk to traders about when they have traded at their very best – when they have had those peak moments – they typically describe them using words such as:

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