Stop Losing Trades. Build Your 4-Step Discipline Profile 💪

Summary

In this video, the speaker guides viewers through an exercise aimed at improving trading discipline. They discuss identifying personal trading problems, defining clear rules to follow, and setting realistic goals. By outlining key rules—like taking only one trade per day, sticking to predefined setups, and managing position sizes—the speaker emphasizes the importance of emotional awareness to avoid impulsive behavior. They also highlight the significance of setting limits, recognizing triggers for emotional 'tilt,' and striving for discipline-based goals, such as achieving consecutive days of disciplined trading without deviation.

Takeaways

• 😀 The exercise, called a discipline profile, helps identify where your discipline breaks down and how to rebuild it.
• 😀 Writing down your bad habits, triggers, and goals can provide clarity and help in maintaining trading discipline.
• 😀 The first step in the exercise is to identify your biggest trading problem—such as impulsive revenge trading after a loss.
• 😀 Setting specific, predefined rules is crucial in staying disciplined, such as limiting yourself to one trade a day to prevent revenge trading.
• 😀 A key rule is to take only valid, predefined setups based on your criteria, and avoid random or impulsive trades.
• 😀 Position sizing is important—deciding on a maximum size per drawdown (e.g., one micro per $500) helps in managing risk.
• 😀 Setting a daily cutoff for losses (e.g., max loss of $100) helps in maintaining emotional control and preventing larger drawdowns.
• 😀 Identifying your tilt triggers—such as missing a trade, bailing on a winner, or taking a revenge trade—can help you recognize when to stop.
• 😀 Goals should be discipline-based, not necessarily long-term. An example goal is 24 consecutive days of sticking to your trading rules.
• 😀 Emotional awareness, combined with the ability to act on it, is key to staying disciplined and avoiding tilt or impulsive decisions.

Q & A

What is the purpose of the 'discipline profile' exercise mentioned in the script?

The discipline profile exercise helps individuals identify where their discipline breaks down in trading. It encourages reflection on bad habits, triggers, and personal rules, and serves as a tool to rebuild stronger discipline by setting realistic, short-term goals.

Why does the speaker emphasize the importance of identifying your biggest trading problem?

Identifying your biggest trading problem is crucial because it allows you to focus on the root cause of your trading issues. By understanding the behavior that consistently gets you into trouble, you can take actionable steps to address it and prevent it from happening again.

What trading issue does the speaker struggle with, and how does it affect their performance?

The speaker struggles with impulsively jumping into revenge trades after a loss, which often leads to larger losses, emotional tilt, and blown accounts. This behavior contributes to a cycle of negative emotions and poor trading decisions.

What are the speaker's top three trading rules, and why are they important?

The speaker’s top three rules are: 1) Only take one trade per day to prevent revenge trading. 2) Only take valid, predefined setups based on strict criteria. 3) Limit position size to one micro per $500 of drawdown. These rules help the speaker maintain discipline and reduce the likelihood of emotional trading and large losses.

How does the speaker define their daily cutoff for losses, and why is it important?

The speaker has set a daily cutoff of a $100 loss to ensure that their losses are always smaller than their average winning days. This limit serves as a safety net to prevent excessive losses and to keep their trading day from spiraling out of control.

What is the speaker’s strategy for managing tilt triggers, and how does it affect their trading?

The speaker identifies tilt triggers, such as missing an A+ setup or taking revenge trades, and uses them as cues to stop trading before emotional distress takes over. Recognizing these triggers helps the speaker avoid the negative cycle of emotional trading and prevents further losses.

What specific goal has the speaker set for themselves in terms of discipline, and how do they plan to achieve it?

The speaker’s goal is to achieve 24 consecutive days of discipline wins. This goal is a short-term target to track their consistency in following their rules and maintaining discipline. The speaker plans to achieve it by reflecting daily on their performance and adjusting as needed.

What does the speaker mean by ‘discipline wins’ in the context of their goals?

‘Discipline wins’ refer to days when the speaker successfully follows their trading rules, such as not breaking the one trade per day rule or avoiding revenge trades. These wins focus on adhering to the principles of disciplined trading, rather than on making profits.

How does the speaker's emotional awareness contribute to their ability to manage losses and tilt?

The speaker’s emotional awareness helps them recognize when they are frustrated or on the verge of going on tilt. By being mindful of their emotions, they can take steps to shut down trading before making impulsive decisions, such as breaking their rules or revenge trading.

What does the speaker mean by 'emotional baggage,' and how does it affect their trading decisions?

‘Emotional baggage’ refers to the emotional residue from past losses or mistakes that can influence current trading decisions. The speaker acknowledges that bringing these emotions into their trading can lead to hesitations or poor decision-making, so they work to leave them behind before taking a new trade.