Previous research suggests that the disposition effect is a costly behavioral bias. A study argues that market professionals usually use the term ‘discipline’ to indicate trading strategies that minimize the influence of the disposition effect. In this paper, we examine two hypotheses. First, we test whether discipline could minimize the influence of the disposition effect on trading performance among individual investors. Second, we examine whether the influence of the disposition effect on trading performance under different levels of discipline. Using the dataset from TAIFEX, we show that the discipline measurement we used is more suitable for professional investors than amateurs. Furthermore, we demonstrate that under different levels of discipline, the influence of the disposition effect on trading performance will be different. Investors who exhibit a high level of discipline and a low level of disposition effect tend to have better trading performance.

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