In the fast-paced world of trading cryptocurrencies, you need more than just technical prowess and knowledge to be consistently successful.

Yes, understanding a project’s roadmap, cryptocurrency fundamentals, and possible trends makes up a large part of trading. However, the often-understated psychological edge for successful investing boils down to one quality: trading discipline.

This may seem like a relatively obvious concept. That said, anyone who has delved into the dynamic world of cryptocurrency trading knows that one needs to make plenty of quick decisions. Maintaining stability, making the correct call, and knowing when to dart in and out of a specific position requires an elevated state of mind.

In general, maintaining trading discipline and building a solid strategy devoid of emotional attachment is what pushes traders across the finishing line.

Pre-Trading Analysis

Abraham Lincoln is famous for his quote on the importance of preparation:

‘’Give me six hours to chop down a tree, and I will spend the first four sharpening the ax.”

This logic naturally applies to a lot of facets of real life. In cultivating trading discipline, fundamental or technical analysis is important in making informed decisions.

Before day trading, it is crucial to strategize and have a basic understanding of the cryptocurrency market. Therefore, before placing a position, check the day’s calendar for fundamental reports that may influence your setup.

In ordinary stock trading, a company’s quarterly data, for instance, can shake up prices during major markets sessions. For crypto, many factors, ranging from regulatory developments or even a hardfork, can significantly impact prices. Furthermore, market aspects like volatility, momentum, trends, and divergence are integral to trading.

Pre-trading analysis is essential for coming up with a practical cryptocurrency trading plan. When it is integrated into the process, it creates a tangible reference and helps a trader maintain discipline.

Reading Graphs and Core Price Patterns

Basing your positions on actual and actionable data is absolutely a significant part of trading discipline. You can choose to either follow the market sentiment and base your trading decisions on rumors and news through fundamental analysis, or you can instead learn to read graphs and operate based on trade patterns, eliminating the need for news and other reports, through technical analysis. The latter approach requires technical know-how, refinement time, and experience but is no doubt rewarding. The cool thing about technical analysis is that the strategy you create can be used as input for trading bots.

A disciplined trader can, for example, select a liquid asset with high participation, strong partnership, and transparent operations. In mainstream stock markets, a stock with consistent dividends is ideal. Likewise, in cryptocurrency trading, rigorous research should inform traders’ decisions, helping them timely enter or exit a position.

Done correctly, analysis increases the likelihood that you will have a positive market flow in your trading balance sheet. This is the entire point of having trading discipline. When you have consistency in trading, you have a bigger profit potential.

Market Sentiment

This refers to the combined sentiment of traders at a particular point in time. In ordinary practice, you can either follow market sentiment or be contrarian and swim against the tide when making trade decisions.

Additionally, the frequency of your trades and the amount you stake factors into your trading fortunes. Therefore, an excellent understanding of market sentiment and its reliability form a significant part of the trading curve. Ultimately, trading is not a sprint but a marathon. Marathon athletes who show consistency and strategy usually come out victorious in the long term.

One should avoid forums and chat rooms when making objective trades. Listening to chatter can make you second-guess your plans and lead to rash decisions. Strike a balance between reading the market sentiment and sticking to your plan.

Trading Discipline and Panic Trading

Traders in the cryptocurrency market know, more than anyone, the role that panic trading can play in the market. Whether it is the fear of missing out (FOMO) or panic selling, haphazard trading is all too common. FOMO is largely based on emotions, with investors scrambling to buy an asset out of fear of missing out on potential profits. Normally, FOMO-driven positions end up going south.

FOMO is a great motivator for impulse buying, and such snap decisions can be detrimental to your portfolio. At the risk of stating the obvious, impulse buying can indeed result in quick gains that feel amazing. However, in the grand scheme of things, it is not nearly as reliable as making calculated trading moves. Every investor obviously wants the biggest loot in the market, but it’s better to consistently take measured steps than to jump straight into a ditch. This kind of greed, for lack of a better word, can bring about losses through the rush to take positions out of impulse.

FOMO is one thing that drives price action. Without FOMO, price reversals in asset classes would be unlikely. But in short, trading discipline can help investors avoid being hit by a freight train. A market fueled by fear can suck you into a spiral of doom as the market turns suddenly. Patiently maintain a setup. If you chase shadows, you will end up running in circles.

When reading charts, chasing the market can manifest in drawing the wrong conclusions and making the wrong decisions by interpreting as signals patterns like flags, pennants, or even indicators such as MACD divergence and others. Market reversal after a FOMO can lay waste to a position you took with the herd.

Disciplined traders only take up positions if there is a clear indication that the prevailing trend will continue. FOMO traders operate in the complete opposite way. In the financial markets, FOMO can create spectacular bubbles like at the height of the great Bull Run of Q4 2017, when digital assets were spectacularly overvalued. As soon as the market fortunes reversed, however, those who had bought at peaks took a hit, losing more than half their capital in the crypto winter of 2018.

The Importance of Following a Strategy

Failure to stick to a designated strategy is the opposite of disciplined trading. FOMO trading relies on uncertain expectations of price movements rather than logical thinking. Even if you decide to make a FOMO decision and it proves lucrative, it is not always reliable. Therefore, it is important to read multiple technical and market indicators and ensure that your suppositions are accurate and objective.

Also, risk management, another important aspect of disciplined trading, is lost in panic trading because making an impulse trade sometimes requires an investor to place a lot more of their assets or funds at risk than they would have otherwise done.

An investor with a well-thought-out strategy doesn’t need to panic-trade. Moreover, in the event that a disciplined strategy investor jumps on a strong uptrend, it has to be complementary to the adopted trading strategy. There is also the lucrative though risky world of cryptocurrency derivative trading, where traders can benefit from pumps or reversals.

Either way, use your strategy as a base and only make slight and practical tweaks as you go along. Remember, failing to plan is planning to fail.

How to be Disciplined in Trading

Having discipline in long-term trading is one thing, but taking a disciplined approach in day trading is an entirely different ballgame. Day trading is more intense, psychological, and technical because it relies heavily on instantaneous market shifts.

When you explore a modern trading platform like Xena Exchange, it is clear that day trading is an increasingly booming aspect of the crypto industry. Margin trading, for instance, gives an investor more leverage and can be very profitable. On the flip side, it carries a significant risk if not done correctly.

Investors can pick multiple strategies on the Xena Pro trading terminal, whether they are novice traders or seasoned cryptocurrency traders. The unique desktop terminal offers conveniences such as built-in calculations, a wide range of indicators, one-click trading, and panel-binding, among other exciting features. Having experience helps, but the Xena Pro terminal is really for everyone. Download Xena Pro and kick-start your day-trading experience.

In day trading, you need a plan and experience to make good returns. Discipline, especially in day trading, is fundamental because of the quick entry and exit and risk-management measures traders are expected to comply with. In margin or derivative trading, be careful with leverage, as it is a double-edged sword.

Pre-market analysis will give you an idea of the great trading opportunities on offer. For instance, traders that have deployed robots can use a strategy that provides about five trades a day and has set stop losses and targets that kick in automatically. The trade has a limited time during the actual trading activity to make entry orders, and every second carries the potential to mess up your plan, as you can take more positions than you should or prematurely exit.

Discipline in the strategy and not frequently tuning the risk-management approach can provide stability for an active day trader. With a disciplined strategy, you only need to follow the trade signals and act according to your plan unless there are extenuating circumstances. This creates a mindset where you don’t act rashly when there are no meaningful opportunities but are still alert for developments. Even when acting instantaneously, you need the discipline to effectively capitalize on opportunities.

Trading discipline builds several qualities in day trades. Patience is a huge aspect of disciplined trading. Investors have to wait and execute their trading strategy and wait for the appropriate entry and exit moments. Jumping in and out is risky but is rampant with new traders. Strategy-based market moves add to your repertoire as a great trader.

Adaptability is like clothing to an investor because trading days are often dissimilar in many ways. The analysis part of formulating a strategy for day trading is not a rigid textbook approach. Instead, it calls for great adaptability in aspects like volatility to complement your patience. Discipline also extends to the knowledge of when to not use your chosen strategy.  Adaptability makes traders relevant, as they can process events and information in real time without overreacting.

Patience also requires mental toughness.  It goes without saying that in the course of day trading, the market will occasionally throw losing trades at you. Even when this happens, remain objective to avoid making emotional and retaliatory trades. When deciding whether to double down or abandon a strategy, mental toughness is important. Successful traders do lose some of their positions, just not as frequently as they profit.  Even in what looks like a losing streak, stay focused and rational and don’t let the losses affect your judgment.

Final Thoughts

No one is born with exceptional trading discipline. Like most other skills, the more you work at it, the better you become. Having a disciplined approach doesn’t necessarily mean a conservative but rather a logical approach.

Xena Exchange has the right environment for crypto traders to cultivate their trading discipline. With tools like the Xena Market Barometer, easy-to-use terminals, and proprietary indicators, there is an opportunity to deploy whatever trading strategy you desire.  Cryptocurrency is still a relatively young market, and panic trends under the guise of informed market patterns are all too familiar. The bottom line is that having a disciplined approach to trading is the way to go in making successful moves in the market.