The 4 Biggest Mistakes in Stock and Futures Trading Strategies, Part 4

Part 4 of 4

NEW YORK (TheGoldAndOilGuy.com) -- The Most Important Skill That Money Can't Buy -- Self-Discipline

This is the last part of my four-part series. This last mistake is the by far the biggest and hardest problem individuals have. Believe it or not, the best way around it is with the use of algorithmic trading strategies that trade for you simply because they  cannot mess things up. This is one of the reason automated trading has exploded in the recent years.

Over the 16 years I have been trading and investing, I have never found a person who has not had discipline issues in their trading career. The brutal honest truth you likely do not want to hear is that you will never succeed at trading if you cannot follow a proven trading strategy and all its rules over and over again.

While some individuals just don't have enough discipline to trade, most of us fall victim to fear, greed or our ego causing us to break our trading rules and do silly things with our money or open positions.

Lack of discipline is failing to do what you should do in a given circumstance when trading your strategies. We all know how easy it is to break rules from time to time because our gut feeling is so strong against what our trading strategy is doing but it is a huge mistake to intervene.

How to Avoid Your Lack Of Discipline

There are only three ways that will only help reduce (not eliminate) your lack of discipline.

1. Lose enough money that you now respect the market.

2. You have taken the time to think, create, and test a proven trading strategy that trades within your market philosophy and risk levels. (I talk about this in great detail in my book.)

3. You either automate your trading strategies or subscribe to an automated trading strategy that removes you from the equation.

An interesting way to think of trading is to not think but react.

The key to defeating your lack of discipline is to create and trade a system that is very simple to execute. You must have 100% confidence in the system so you do not step in and alter its trading decisions. The key is to react and execute a trade first with your proven strategy. Once you are done you can think about what and why things did what they did all you want.

The last point I want to make is that if you have your own system it is crucial that you are not tinkering with it all the time. If you keep tinkering with it, then you will never truly know how well it works and you will second-guess its activities and remain an undisciplined trader.

Four Biggest Mistakes Series Conclusion:

My primary goal of this series has been to show you that there really is only one person who can control your success or failures in trading along with everything else in life. That person is you. In the end you are responsible for everything you have done.

The most common pitfall traders fall into is that when something goes wrong they blame the market for the loss and not themselves.

The key in trading is to accept that you will have losing trades and understand that it is part of this business. When you lose a trade be sure not to allow these bad experiences to have a negative effect on subsequent trades.

So the next time you find you self contemplating breaking a trading rule that has proven to work well over the long run for you, know that if you fall off the discipline train you will instantly be categorized as one of those "90% of losing traders" people.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Chris Vermeulen is founder of the popular trading sites www.thegoldandoilguy.com and www.ActiveTradingPartners.com. There he shares his highly successful, low-risk trading method. Since 2001, Chris has been a leader in teaching others to skillfully trade in gold, silver, oil and stocks in both bull and bear markets.

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