Discipline in Futures Trading

Futures trading is an emotional journey at times, particularly when you start trading more significant amounts of money. The markets can be a cruel place to do business, and it’s often easy to get frustrated and angry at trading situations as they unfold. To not experience these emotions when you’re losing money is to be inhuman, but to control these emotions and channel them into more productive behaviours is the trick of the successful trader. When you’re dealing with futures and trading on the futures markets, having the discipline to stick with your trading plan and adhere to your broad trading strategies, come what may, is central to succeeding over the long marathon-like slog that is playing the markets professionally.

Discipline vs Dynamism

Having already discussed at length the importance of the trading plan, and why you should implement and adhere to a plan throughout your exposure to the futures markets, it’s worthwhile considering the balance between discipline, that is sticking to the rules, and dynamism, i.e. responding on an ad hoc basis to trading conditions as they arise. Clearly there are merits in both approaches, and neither is mutually exclusive. For the most part, retaining a healthy degree of dynamism to respond to opportunities that develop that might not be strictly covered in your plan is worthwhile, and you should never feel restricted by your plan to any great extent. Where the real value in the planning process lies is in consistency.

In a game of aggregates, you need consistency. It’s you’re lifeline. While some positions will inevitably run wayward, you need to consistently bag a return on your positions if you ever want to make money, and having a strategy that outlines a planned approach to achieving those goals is a valuable aid. The trading plan is on your side, and performs a very important function in preventing the subjective from overriding the objective – in other words, preventing the heart from ruling the head. With all the passion and emotion that can be caused by futures trading, the plan acts as the cool voice of reason, and that’s why you should take care to follow it as you trade.

Control The Emotions

When you’re losing money, you become far more susceptible to panicking and making mistakes. The futures market, unfortunately, punishes rash mistakes with vigour, and simply being too aggressive or too hasty in your next move, you can add further woes to your wallet. The mantra of discipline is crucial here. Reset the psychology, draw a line under your trade and make sure you’re getting the fundamentals of your next trade spot on. Don’t be rushed into making a decision just because you’re eager to recoup losses – make sure you remember your trading theory and adopt a patient approach to researching your next trade.

The calm, disciplined trader who exercises caution and a level head will always perform better over time than the emotional trade. When you’re in a heightened mental state, your ability to think and reason trading positions cannot possibly be as clear, and as a result your best decision making comes from a place of reasoned, disciplined trading responses.

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