Accountability in trading

I recently heard from a trader who told me that he was having discipline problems in his day trading. He knows how to trade, he knows what setups to look for in the charts, when to enter and when to exit. Their trouble lies in having the market discipline to just wait for those market setups and not take half-baked trades in the meantime.

This is a very common problem for traders, I think everyone goes through it at some stage in their career. In working with student traders over the years, I have noticed a phenomenon that I believe is one of the reasons for my lack of discipline. When I see student traders trading, they sit very patiently and explain to me what they are seeing on the charts in front of them. When they see that a valid setup comes along, they can very happily tell me what the setup is and how they plan to trade it, and later they will execute the trade accordingly. When the same student is trading alone, they start taking all kinds of off-plan trades, setups that are not actually setup at all. The difference, it seems, when trading alone is that the trader suddenly has no accountability. If they have someone watching over their shoulder while keeping them under control, all is well. They know that if they trade out of a plan they have to tell me why they did it when it all went horribly wrong. Trading at home alone, the trader is only accountable to themselves, and they are probably not going to give themselves that hard time if they don't follow their trading plan to the letter!

So it seems that one of the benefits of trading for a living, independence from the boss, can actually be a hindrance at times. What can a trader do to address this lack of accountability in their business, short of hiring a manager to oversee them? One approach I recommend is to provide loud commentary throughout the trading session, as if talking to a mentor. Explain what you are seeing on the trading chart, where you think a trade is setting up and why, how you will enter to the trade, how you will manage the trade, and where you will exit from wherever the price subsequently goes. . When you talk out loud you use a different part of the brain than when you only think about yourself, and this can have surprising results; It's easy to talk yourself into a trade you want to take even if you know it's not perfect, but talk it through out loud and you'll hear yourself making excuses and quickly making that mistake. Will see what you are going to do. I know talking to myself sounds a little weird, but it really works.

Another option to make yourself more accountable for your trades is to join a chat room. There are lots of them, lots of free ones as well as some paid ones that place call trades in real time (I wouldn't recommend those, they are often run by people running their calls). If you find a good room and commit yourself to calling your trades in real time, knowing that you will have room to explain exactly why you took a really stupid trade will really help you get it in the first place. But you will have to think twice about taking it.

These are two simple ways to make yourself more accountable for your trades and therefore apply more discipline. There are many more interesting ways to increase discipline as a personal skill, and I hope this article has given you some ideas for developing your own.