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Article:
Accountability In Trading by: Harvey Walsh I recently heard from a trader who told me he has been having problems with discipline in his day trading. He knows how to trade, he knows the setups he needs to be looking for in the charts, when to enter, and when to exit. His trouble is in having the discipline to wait for only those setups and not to take half baked trades in the meantime. This is a very common problem for traders, I imagine 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 think explains one of the reasons for this lack of discipline. 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 themself, and they are probably not going to give themself 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. About The Author Harvey Walsh is a full time day trader and part time trading tutor. He can be contact via his website www.day-trading-freedom.com. This article was posted on August '18
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