The Pain of Discipline or the Pain of Regret

headshot-mesh-150pxDear Investor,

When I was a high school wrestler, our coach told us we would learn the pain of discipline or the pain of regret.

I never fully comprehended that statement until I became a professional trader and at that point it hit me like a ton of bricks.

Discipline, in the trading world, is the ability to form a plan and trade the plan. It is the ability to discard emotion and focus on the trade. It is everything.

At my firm, we had traders from a wide gamut of backgrounds. There were older traders, younger traders, Ivy League traders and high school drop outs. There was nothing from that information that could tip us as to whether they would have success or failure.

After 3 months, we had an indication of who the strong traders would be and at 6 months we had confirmation. Upon analyzing these traders, there was one common trait amongst all of them.

It was discipline.

Fast forward to present day and I am still working on my discipline. Just today I saw a wall of support form around a stock at 93.50. I bought 4,000 shares and was quickly out for a $480 profit.

I understand why one might be inclined to say “good job” but it was not. The stock rallied 3 points and it could have been a 10k to 12k profit.  So where did I go wrong?

With my position size.

I was not comfortable with 4,000 shares of such a volatile stock so I was always going to be quick. This meant I was probably risking a point to make what would eventually be .12 cents.

So how could I have done it better?  Trade less to start.

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If I had just entered a 1,500 share position, it would have been comfortable for me. I would have held that. I would have made between 3k and 4k and still risked that same 1 point.

So, if I was comfortable with 1,500, why didn’t I just keep that when I sold the rest of the position?

Because my discipline had unraveled.

I knew there was a point of risk which meant that my 1,500 shares could have still gone down a point. I didn’t want to turn the $480 profit into a losing trade so I sold everything.

I once again had the pain of regret.

The discipline would have been to trade smaller to begin with.

I took my members through this whole trade on a live webinar and explained why I am a better coach than trader. I know my biggest flaw is to take positions that are outside of my comfort zone and that is why I emphasize to my students not to do that!

By staying within your comfort level, you will remained disciplined and in control of your own trading.

The next step is to try it with your own trading. If you feel like you are out of control, trade smaller.

Trade fewer positions.

Make everything simpler until that control comes back. Even better, if you’ve never made a trade because you are nervous then you can start small. Stay within your comfort zone. By doing this you can get proof of concept and ease into your routine.

If you do it right then by the time you go from 100 shares to 1,000, nothing will be changed because you will focus on the trade instead of the size of the trade. That’s how it happened for me!

I wish you well on your journey.

Let’s do this!

Kind Regards,

Adam Mesh

Adam Mesh is CEO and Founder of The Adam Mesh Trading Group. For the past 18 years he has coached thousands of students to all levels of success in trading. He is also creator of the best selling course The Average Joe’s Beginners Guide to the Stock Market