Why Do Traders Make Mistake "Lack of Discipline"? 

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Why Do Traders Make Mistake "Lack of Discipline"?

A lack of discipline in trading is almost always the result of one or more of the three great obstacles to trading success:

  • Fear
  • Greed
  • Ego

Every time a trader makes a decision regarding any element of his trading he is subject to the effects of fear, greed and ego. This does not imply that we all need hours of serious therapy. It is simply human nature taking over. We all want to make money (thus we feel greed) and we don't want to lose money (thus we feel fear). Cutting a loss is extremely tough on the ego. Once you cut a loss on a trade there is no chance to recoup that loss without entering into an entirety new trade. This explains why cutting a loss is often such a difficult thing to do. How many people enjoy going around and voluntarily admitting mistakes, especially ones that cost them money? Not very many. It simply goes against human nature. Yet when trading futures it is often exactly the right thing to do.

These emotions are at times so powerful that they can cause you to do all kinds of foolish things:

  • You bail out of a trade prematurely with a small loss simply because you don't want to risk a bigger loss (fear/ego).
  • You stop trading altogether during a drawdown — right before things turn around (fear).
  • You take a profit prematurely because you don't want to give it back, thereby missing a big profit (greed).
  • You double up or increase your position size in an effort to get back to break-even or in an effort to "make a killing" (greed).

This list goes on and on ad infinitum.

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Lack of Discipline
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