Most importantly, more so than any other industry I have worked in, is the emphasis you must put on you. You are what makes or breaks your trading. You need to be focused. This means picking a time of day to trade where you can concentrate 100%. No distractions from family, work or day to day life. You have to start with the premise that commitment to trading is best done when you have the best environment, typically a peaceful and quiet time.

From this bedrock of a strong strategy and focus, you will need 6 stage mechanism being Discipline, Routine, Principles, Rules, Control and Patience.

1. Discipline

Discipline is the overriding feature. Discipline of all 5 mechanisms and if your discipline falters in any area, failure is not too far away. You have to set up a system that suits you where there are consequences for not keeping discipline in any aspect. This is of course a personal choice; however, if you do not have the right consequences for lack of discipline for example such as to stop trading for the day or even the week or perhaps delay in buying yourself that treat then your boundaries can become blurred and you may lose focus. Working alone as a trader mean you do not have your boss there to keep you in line. Mental discipline is difficult when you are sat there alone. Personally I do not have a consequence system I have a trading buddy, and he keeps me disciplined because I do not want to have to explain to him my conduct for not sticking to my rules of engagement when I took a poor trade.

2. Routine

As you read this you will hopefully find that all these mechanisms trickle down from the overall aspects of trading right down to pushing the button to trade. As routine is so important, your overall approach including when you trade to where you trade, all the way down to the procedure you establish when executing a trade will form the basis for a structured routine.  Your routine is a safety net which is linked to the discipline which makes you commit to your routine every time. If you trade outside of your trading plan (routine) then it will more than likely be the wrong trade, a punt you have taken without forethought and yes you may get some big wins but consistently over time you will not be trading and you will not be set free.

3. Principle

You have to have principles in place. I love principles as they allow you to apply general laws to specific examples you see in the market. The principles you obtain through trial and error and experience give you the framework to execute well thought out trades that have the best chance of success and if they don’t you can analyse and grow and develop for the next time you see that particular setup. There are fundamental laws on how you would like things to work out. They provide the overarching principle you live your trading life by. And these will start to bring success as they are developed from your beliefs which will drive your long term behaviour of success.

4. Rules

These principles do drill down to specific rules within trading. They come from learning, obvious rules like do not chase a trade or always trade with a stop loss, to rules you develop over time say on a mistakes sheet that you add to over time. But they are all created out of your principles to regulate the correct conduct when trading. All aspects are important but rules cannot be broken as breaking rules will lead to losses, because you now know that these are in place to keep you safe, from wild market moves, and more importantly yourself. The rules you adopt will be the guides to make consistent results. But you need to be committed to not breaking them or trading outside of your trading plan.

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