Self-control or internal control, is the ability to control your thoughts, emotions, and actions. It is one of the most important character traits required for successful trading. However, it is also one of the hardest character traits to develop, and one attribute we struggle with our entire life.

An example of self-control is not eating that dish of ice cream at night when you have a craving for it. Ice cream may not be your weakness but there must be other situations where you are not in total control of your emotions and actions. In essence, you have temporarily lost control of yourself.

Discipline is often mentioned as an important character trait to possess in trading. There are two kinds of discipline. The first is self-discipline, which may be used interchangeably with self control. The second kind of discipline is external discipline. External discipline refers to control from an external authority which is imposed on an individual. An example of external discipline might be a soldier in the army. The soldier must listen to and obey all orders from an external authority.

Internal discipline and external discipline are two entirely different-and in fact quite opposite-types of discipline. Internal discipline requires the ability to control oneself internally. External discipline requires the person to surrender all or most control of oneself to an external authority. The authority may then control the person.

One might argue that external discipline requires self-control to carry out orders, but there is an important distinction. In external control the individual becomes an automaton, or robot, for another power. When not under external control, you must determine the course of action and become self-directed. The difference between deciding a course of action and an authority ordering you to one is crucial and more difficult.

The distinction between internal and external discipline is crucial in trading. The type of discipline required for trading is internal discipline, or self-control. When trading, you will always be required to have strong self-control over your actions and not listen to, or be dissuaded in any way by suggestions or tips from other people. Trading requires you to have total control over yourself, unlike external discipline where you surrender or subordinate control to a higher authority.

Traders are certainly a varied group, but one of the most common threads running through the more successful traders is the amount of self-control they possess. Good traders create a set of rules and are able to follow them because they possess self-control. They are not persuaded by others, but resolve to carry out their own ideas.

Why is self control so important in trading? A trader is often required to make many important, and usually critical, decisions in a short period of time. Each decision is based on a set of rules developed by the trader which must be followed. It is very easy for a trader to become impulsive and abandon the trading plan or rules. For example, the trader believes the market is going higher, but there is a rumor out that the market will soon drop. What to do? The trader cannot simply abandon a course of action and follow every new rumor and news tip which comes forth. There is so much conflicting and contradictory information that is continuously generated. Any trader heeding all this information would become so indecisive that no decision or course of action could ever be taken.

Of course, most traders need to be well informed and aware of current events. But, there is a critical difference between being aware and being persuaded by external information. The trader must assimilate the information but not be swayed into making an impulsive decision.

There is another reason self-discipline is so important. Trading will require going through difficult periods. Whether it be a bad trade or series of losing trades, trading will continually put a person through emotionally and physically jarring times. It will be easy to abandon trading at these times, or bet the whole stake to take the easy way out and make or lose a fortune. This is when self-discipline is essential to avoid quitting or a potential disaster.

You will need self-discipline to continue with your trading plan and not give up during tough times. You must have a clear idea and trading plan, and know how to selectively incorporate information into the entire trading process. You must have the discipline to develop a course of action and follow it through to fruition.