We have all heard the saying "Knowledge is Power." This phrase is originally attributed to philosopher Francis Bacon from his Meditationes Sacrae (1597), and Thomas Jefferson went even further, saying that knowledge also provides safety and happiness.

That might be true for many areas of life, but not so in trading. If it were true, every trader would make millions of dollars in profits. Because everyone knows what to do, but only a selected few have cultivated the mindset required to do what they know.

The Knowing-Doing Gap

Knowing what to do is knowledge. Doing what you know, that is skill.

Mandi Rafsendjani

The skillset we are talking about is, of course, discipline. Only if you have the skill to be disciplined will you be able to apply your knowledge and make it as a profitable trader. Until you have developed discipline, knowledge is only potential power (the term potential power was coined by my good friend Andrew Swanscott from Better System Trader).

Knowledge ≠ Skill = Discipline

Discipline is Learned Behavior

The good news is: Discipline is not some magic potion. Discipline is learned behavior. Anyone can learn how to be disciplined if they are not already.

And if you are not disciplined, then the skill you have learned is how to not be disciplined. And no knowledge in the world is going to make up for that gap. That is why knowledge does not equal skill.

Linda Raschke on trading intelligence

Market Wizard Linda Raschke once said in an interview: "You don't have to be a rocket scientist to be a trader. In fact, some of the best traders whom I knew down on the floor were surf bums."

The Only Skill That Matters

You can see, the only power that truly provides safety and happiness in trading (to say it in Thomas Jefferson's words) is the skill of discipline. This means if you spend more time on training your discipline muscles and less time on hoarding more and more knowledge, you have a true chance at achieving most of your dreams and goals in life.

If you are ready to improve your discipline, the work begins not with another strategy course, but with understanding why the gap between knowing and doing exists for you, and closing it permanently.

Mandi
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