Discipline: the rules you do not break

A written routine is a set of lines you fill in while the account balance is still the number you expect. Two readers open the same page. One writes five lines before the market opens. The other waits until a loss arrives, then writes the rules from memory. The first reader has the same five lines every day. The second reader has five lines that change with the mood of the account.

The reason to write before the session is that the numbers are calm. When a position is open, the spread moves and the balance moves. A rule written in that moment tends to match the position rather than the account. For example, a reader with KSh 50,000 who risks 1 per cent has KSh 500 of room. If that reader writes the rule after a loss, the balance may be KSh 47,000, and the same 1 per cent is now KSh 470. The rule has changed without anyone deciding to change it.

Write the five lines on paper or in a file that sits beside the platform. Each line must end in a number or a yes. A line that says be careful cannot be ticked. A line that says stop at 20 pips can be ticked. The routine is the same every day, so the only thing that changes is the figure you write next to each line. That is what makes it a routine rather than a reaction.

The fifth line is the cost, and it is the one most often skipped. Cost has two parts on a EUR/USD trade: the spread and any commission. The spread is the gap between the buy price and the sell price. If EUR/USD is quoted at 1.0850 and the spread is two pips, you start the trade two pips behind. On 0.10 lots, one pip is 1 unit of the quote currency. At about KSh 108.50 per unit, two pips is about KSh 217. That amount leaves the account before the market moves at all.

The cost line is checked first when the position is largest because that is when the gap matters most. A reader who risks KSh 500 on 0.10 lots has about 4.6 pips of room, as the page shows. If the spread is two pips, nearly half of that room is gone before the trade begins. The same reader on 0.01 lots has ten times the pip room for the same KSh 500, so the spread takes a smaller share. The routine forces that comparison before the order is placed.

Costs vary between brokers and change through the day, so the KSh figure is an estimate and not a quoted price. Write the estimate on the line, not the word cheap. If the line cannot be answered with a number, the trade does not go on. That single rule removes the largest source of surprise in a small account.

A routine is tested when the balance falls. Two readers both start with KSh 50,000 and both limit each trade to 1 per cent. One keeps the five checks after three losses. The other drops the cost line to make the next trade feel larger. The first reader is still risking KSh 500 or less on each trade. The second reader is risking more without writing it down. The difference does not appear in any single trade. It appears in the balance after a series of trades.

The order of the checks matters as much as the checks themselves. Position size, stop distance and cost are decided before the market moves. If you decide the stop after the order is placed, the stop is chosen by the position rather than by the account. A stop of 20 pips on 0.10 lots needs KSh 2,170 of room at the conversion rate above. A reader who has set a limit of KSh 500 cannot take that trade. The routine makes that visible before the order, not after.

After the session, write one line about what happened. Do not write whether the trade won. Write whether each of the five lines was ticked before the order. A ticked line is a fact you can check. A feeling about the market is not. This is the part of trading that is the same every day, and it is the part that keeps the account alive long enough for the other lessons to matter.