Who REALLY Pays When Trading Discipline is Broken?

Norman Hallet of  The Disciplined Trader has long been touting just that, discipline in trading. Today Norman shares an experience that I have a feeling many traders can relate to on many levels. Perhaps you've had a game plan, but panicked and couldn't stick to it when things were looking down, or maybe even up? Either way, I think you'll enjoy a peek into his mind and learn something from his perspective that you can apply to your own trading.

We hope you enjoy the article and if you have a moment, share your own experience in our comments section.


Dawn is just breaking and a few early birds are chirping their little heads off. I let the dogs out for some overnight relief and get the coffee started.

I walk past the TV-tempted to turn it on and see what new disaster or murder took place overnight - but stick to the plan.

I walk over to the small waterfall I had constructed in the breakfast room and turn the pump on and the soothing sound of water gently cascading over artificial falls fills the small room overlooking the garden.

I sit down in chair and gently close my eyes. I begin silently repeating my mantra. I envision a small bubble slowly rotating in clear blue water. The sound of the waterfall is all that I hear.

My breathing slows and I drifted off into peacefulness. It's like sleep but I can still hear the continuous gentle flow of the water and the hum of the electric pump. It's delightful and I concentrate on the bubble and the slow steady beat of my heart.

Intuitively, I stop repeating the mantra and very slowly open my eyes. Twenty minutes has elapsed in what seems like five minutes. I sit quietly for a few more minutes and then start to focus on today's trading.

The prior night, I had decided on two potential trades. The Euro-Dollar and the Dollar-Yen. Both had been retracing as expected.

I would lay in wait for the entry signal. Stops had been calculated and I had a vision in my mind of what the chart patterns and signals should look like.

I felt good about the possibilities of at least one of these trades making a nice profit. I visualized myself watching the tick mark hitting my preplanned profit targets for both currency pairs.

After breakfast and chasing the dogs back into the house, I went upstairs and brought the computer out of its working sleep. Prices had continued in retracement and everything was in place. I was close to my prey; watching and waiting to pounce.

I told myself to relax and trust in the system.

All indicators needed to be in place to make the entry. No exceptions.

Soon, the Dollar-Yen started to fall into line. The candle made an engulfing bull and the slow stochastic was turning upwards. I would wait for another one hour candle to confirm the reversal.

The Euro-Dollar continued sideways and I focused on the Dollar-Yen. While I waited for the next hour's candle to form, I sent an instant message to my trading buddy in London.

It was lunchtime in his time zone and I knew he was probably watching this currency pair also. We had established a procedure that if either one of us was going to enter into a trade we would alert the other.

We would take a look and confirm if it was a "go" or not and in this way we helped each other stay out of trouble or jump on-board the trade.

Even though I had never met David in person, I felt a very close working relationship with him and he had saved me many times from breaking my trading discipline (we had exchanged our trading systems to make sure we could hold each other accountable).

David answered me and confirmed that it looked like a go although he was already in another trade and his rules prohibited him from entering into more than one trade at a time. He wished me luck and signed off.

The hour had passed and the candle confirmed my expectations. However, the stochastics were still a little high to show an oversold condition. I set the stop-loss and walked away.

I had decided that once I entered a trade, I would not stick around to watch the show but would periodically monitor progress. After entering the trade in my journal, I walked away from my home office and headed out to the golf course.

I loved it. Playing golf and making money at the same time. Like quantum physics, I was two places at the same time.

My golf stunk (I lost all of my balls and had to borrow from a complete stranger) and when I returned home, I found out than I had been stopped out about three hours after I entered the trade.

The stochastics never reached an obvious oversold position and I had broken my discipline and paid for it.

My first tendency was to get angry with myself but I sat down and did a complete analysis of everything I did and saw quite clearly that I had not kept to the discipline.

Now, I had to pay the price: I was required to take three days off from trading and forced to review my system to "refresh" myself on what the procedures were. I wrote all of this down in the journal and swore to myself that I would never enter a trade without the confirmations.

Live and learn. Or is it live and pay?

I no longer felt angry with myself and actually felt good that I had seen my weakness. I would see to it that it would never happen again. I was a professional and would bounce back.

Norman Hallet
The Disciplined Trader

Norman Hallett, the Internet's Leading Authority on Trader Discipline. Norman is offering Traders Blog readers 4 of his "CLASSIC REPORTS", FREE. If you've ever hesitated to pull the trigger on a trade, or if you battle with fear or greed, then don't hesitate to take a look at these reports.

17 thoughts on “Who REALLY Pays When Trading Discipline is Broken?

  1. All i should say is, "Read trading in the zone by Mark Douglas". Anything can happen in the currency market. You can have correct analysis and super candlestick pattern reading and still get it wrong. My suggestion is also to know where to place your stop loss. Is my stop loss protected by any lines or Fib levels offering resistance. This could save you money and add more to your account.

  2. Thank you so much Mr. Walter for your opinion about me.
    It is true that in Iran, but sanctions are not causing these things that I can not do this kind of resource use. I'm all our efforts until all the resources I use. I believe I will succeed one day.
    Thank you.

  3. Adam,

    If you do decide to do a video on oil would you mind waiting until after the inventory report tomorrow?

    Thanks, Justin

  4. First time subscriber..and enjoyed all the comments..imagination and emotion for some gut and experience for others,hope we all pounce on the opportunity/ies when presented.kudos to all..keep the positive vibes flowing..WITrader

  5. A few weeks' ago Adam did a video on OIL. Please could he do another one as this market appears to be stabilizing - maybe it's time to buy in again.

  6. Great Alireza, I think you have made a good choice in choosing Adam's site. I wish you success as a trader!!!

  7. I wish trading were as simplistic as this, the markets move too fast to allow a round of golf. It has already been said, you have to have your own system and learn by experience, usually the hard way.

  8. My name is Alireza from Iran and speak your search. I am very happy that I am a member of this site and all the features of this site and its information and I use to date and very useful for me cause I is satisfied.
    Thank you very much and this site and all officials who better to do it try.
    Thank you.

  9. As a man who has traded for 16 years, I would agree that discipline is important, but really the way to be a success in trading must be learned by experience, no one can teach you that, you must learn for yourself. Many people will help you but you must learn to help yourself, this takes time to learn.

  10. I have purchased Norman's mind training program and it is great stuff. However, I need to rope it into my regimen a bit more. Doing the recordings every day for 30 days would be a good plan I guess.

    I took two losers in forex this week (USD/JPY short and USD/CHF short before that) but I stayed within my system so that does not cause me any concern. Its smart to just take things slowly as there are times when your system isn't really working with the current market.

    In forex this month, the trade triangles had show immensely profitable trades (those Euro/USD longs were amazing) but the key is in the discipline and mental strength to take them and stay in them!

  11. Mr. Hallett, What a great article.
    Thank you for sharing your lesson. I learn from it too.
    Success with your strategy,

  12. Norman,

    I was most impressed to read that you start the day with 20 minutes of Transcendental Meditation, as I do, and have done for the past 40 years, without a miss! New research is coming out all the time showing increased brain coherence and integration by using this technique. It would seem to be a must for the disciplined trader. Too bad about the trade, but great to hear you were able put it all in its correct perspective. Thanks for the trading knowledge you share.

  13. Excellent Post Mr. Hallet!

    Discipline 1st, patience 2nd & then action.... can make miracles.

  14. It sounds like this man is a little overdisciplined. Sure you must follow your plan, but even that does not guarantee success. You know you are an experienced trader when losing a trade no longer hurts and the whole thing does not stress you out. That is the life of a trader. Not getting stressed becomes a natural thing. Enjoying yourself, that is most important.

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