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Discipline in trading – Physical discipline

This week we look at a trading discipline that is a bit more ‘out there’ than the mental and technical discipline we have discussed in the previous two posts, that of physical discipline.

The trading environment can be a stressful and tense place for some traders and investors – perhaps more for the short term intraday traders than for medium and longer term trend followers. Though these time frames can also give rise to periods of stress when markets correct sharply and suddenly and prices are decimated as we experienced during the GFC.

Traders and investors need to release tension in a positive way. Take time away from the market and do some type of exercise or hobby. It will allow you to approach the market with the freshness and disciplined commitment that you will need. The market is not the place to seek excitement and thrills. It should be seen as a professional work environment in which your plan for success is implemented according to the rules of your trading plan. Thrill seeking in the market can be dangerous mentally, financially and psychologically and this can creep in with physical and mental fatigue.

In order to operate at peak mental capacity your body needs to also be maintained at a high level. Thus, it is important to maintain regular physical exercise to keep you fit and healthy and keep your mind fresh and focused. The majority of traders and investors I know have a regular exercise regime or hobby that allows them to stay fresh and in shape physically and mentally. The use of yoga, breathing and meditation practices also help sharpen and focus our minds and help to keep us in the present rather than stewing on the past or agonizing about the unknowns of the future.

Taking time out from the markets and having a complete break will also re-invigorate your mental well being and have you motivated and focused to return to the job at hand.

Investing is a lifelong commitment. It’s critical that you remain fresh in both body and mind.

If you do not have a physical training program that you already adhere to on a regular basis for other parts of your life or you feel you require to include a different physical program specifically for trading (like breathing exercises or meditation) ,then commit the process in writing into your trading plan and then execute it.
By combining these three core components of discipline we are able to engage the market with higher levels trust, confidence and consistency, knowing that a positive expectancy or profitable edge over the market will deliver us long term success. All three combine to contribute to trader and investor success and are all inter-connected in their impact on each and every market participant. Discipline is an on-the-journey technique required to get to our final destination of consistency and objectivity.


  • Peter Gallasch says:

    You suggest the benefit of taking time out from the markets and having a complete break to re-invigorate. What happens to your existing portfolio as it is likely that sell signals will emerge while your having time out??. Maybe you move to a high risk market status and halve your portfolio before taking the holiday.!!. What do you suggest.??

    • Gary Stone says:

      Response to Comment by Peter:

      There are many ways of handling this. Firstly I should state that from the portfolio’s perspective it is best that it never takes a rest. However, the portfolio isn’t human and we are!

      Our documentation discusses some options that are open to active investors that have an open portfolio when the time comes to take a break. This can range from shutting the portfolio down completely to hybrids of doing so partially to trading it while you are away.

      What you cannot do is take the break and ignore your portfolio while you are away. This is akin to putting your head in the sand and not taking repsonsibility.

      So think about your strategy for holiday periods, document it in your Trading Plan, then execute it when the time arrives to do so.


  • Stephen K says:

    Hi Gary,
    You often talk about having things in your trading plan. My question is; Does SWS supply a kind of, fill in the blank spaces or is it up to the individual to think of every aspect that needs to be in the plan.

    • Gary Stone says:

      Response to Comment by Stephen:

      Yes, SWS does supply a template Trading Plan. We also have Trading Plans for our public portfolios that can be used as sample Trading Plans.

      However, there are a number of areas in a Trading Plan that individuals need to personalise. To this end our documentation asks a number of questions that need to be answered complete a personalised Trading Plan.

      There are also other areas that individuals should use their own discretion to complete their own Trading Plans. This typically is in the area of Risk Management because everybody has a different risk profile, even if just slight.

      It is important to understand that a Trading Plan, like a Business Plan, is a living document that evolves and grows as one grows as a trader and hence as one’s risk profile changes.


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