The Importance of Discipline in Market Timing


While following the emotional crowd may take away the pain for a short while, Frank Kollar of doesn't think it is the path to profit. Instead, Frank uses a literary analogy to explain why he feels that only those traders committed to following an unemotional timing strategy will stay the course.

The winning market timer is the disciplined market timer.

Sounds simple. And everyone should find this sentence easy to agree with.

Basically, it just means following a specific trading strategy and not deviating from it. But people differ in terms of their ability to maintain self-control and discipline.

How are you handling the current volatility? Are you agonizing over sell-offs and feeling great when the market rises?

There is nothing wrong with these emotions, unless you act on them. That is the reason why non-discretionary timing strategies work. If you follow them, no emotion is involved and you are relieved of having to make emotional decisions.

You just follow the trading plan.

Discipline vs. Emotions

It is easy to maintain discipline with a market timing strategy when that strategy is having a profitable run. But all strategies have times when they are not profitable. This is a fact of trading the markets and accepted by profitable market timers as the price of doing business.

However, when a strategy is going through an unprofitable period, maintaining discipline is something else again.