Today's Quote: “Disciplined inaction." Robert Hall.

It is very likely that if you are receiving this letter, you have spent much time studying the markets. You have likely read many books, subscribed to periodicals, and have many on-line subscriptions. You may also spend some time getting everyone’s opinion, on what may happen on a particular stock or what may happen to a market in general. You have likely taken a seminar on something market related and have likely studied technical analysis.

Many traders have gone past that and focus in on exactly how they want to trade. They have come to rely less on other’s opinions from day to day and focus on learning and educating themselves. Some of those who are at this point have probably come to realize that all of the above, all the study and all the reading does not matter if you do not have discipline.

How many of you had a great play that you never entered or never stayed with because you did not have an exit strategy? How many of you have ended up in plays you did not plan out just because they caught your eye for a fleeting moment? How many of you have looked back at the end of the day and wondered who could have done the trades that you are now reviewing?

When it comes to trading, here is a definition for you. For trading purposes, trading can be simply defined as your ability to develop and follow a trading plan. It is a simple concept. You need to define what you want to trade. You need to define when you want to trade it. You need to decide how to trade and manage it. You need to decide how to handle your account when you are making money (do you keep a ‘trail stop’ on profits?). You need to handle your account when bad days come along (do you have a ‘stop loss’ every day?).

There are many very smart people trading the markets. There are many people who have much experience in financial areas trading the market. But that is not the key. Most people can acquire the knowledge to trade the way they want to trade. The key is to develop a plan and follow that plan. Discipline is what lets you follow the plan.