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Discipline and patience in the stock market

Discipline and patience are fundamental pillars in the realm of trading and investing, serving as the alpha and omega of success. The absence of these virtues can lead to substantial financial losses, a lesson I personally learned the hard way. Three years into my trading journey, I encountered a significant setback, losing approximately 60% of my initial principal. The ongoing battle with my emotions, particularly impatience during market inactivity, has been a persistent struggle.


The desire for quick wealth is a common pitfall among novice stock operators, but the reality is that there is no “get-rich-quick” method in stock trading. Attempts to bypass this reality often result in substantial losses. While there might be instances of individuals striking fortune in the stock market, such occurrences are infrequent. This harsh lesson was my tuition fee for learning the importance of discipline.

Before diving into the world of investing or trading stocks, there are essential steps every investor should take:


1. Create Your Investing Plan


Crafting a solid investing plan is easier said than done, especially for beginners. Many resources mention the importance of an investing plan, loss plan, and money management plan, but few provide a step-by-step guide. In upcoming posts, I will share insights into my own investing and loss control plans.


2. Write It Down


Once an investor begins formulating their plans, it’s crucial to document them. This can be achieved through a personal blog, a paper trading journal, or, in my case, an Excel spreadsheet. Having my plan readily accessible on a flash drive allows me to review it before making any investment decisions.


3. Stick to It No Matter What


Adhering to the plan is the most challenging aspect of investing. Doubt and second-guessing often creep in, leading to a temptation to modify the plan. However, successful investing becomes more straightforward once rules are established. Automation, as seen in systems like the CAN SLIM method, can eliminate the need for constant questioning. Personally, I’ve defined entry and exit rules to streamline decision-making, minimizing the need for extensive chart analysis.


4. Test Your Plant


To ensure the effectiveness of the investing plan, testing is vital. Paper trading, using a stock simulator, offers a risk-free environment for investors to validate their rules and strategies before committing real capital. This testing phase provides valuable insights and confidence in the chosen approach.


5. Learn to Open New Positions Only After Referring to the Plan


Avoid the temptation to impulsively jump into positions by closely monitoring portfolio tickers. I learned this the hard way by racking up unnecessary commissions. Now, I restrain myself from opening any position unless it aligns with my screener results and adheres to the rules outlined in my Excel spreadsheet.

In conclusion, discipline is the linchpin that enhances the outcomes of any investor’s journey. Navigating the temptations and staying committed to a well-crafted plan can lead to more successful and rewarding experiences in the world of investing.


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