Number 0: Master your mind. Cultivate discipline. And conscientiousness
Conscientiousness is the ability to follow a plan. So basically, you need to cultivate the mental mettle to stick to the plan. You also need to be immensely patient and immensely disciplined.
Number 1: Always have a written trading plan.
If you are taking a trade, then it must be written down at least on the previous trading day. Once you have written down a trading plan, do not deviate from it. Which is why it is important to have a trading plan
Number 2: Sit on your hands. Literally
It is easy to get impulsive and jump onto some stupid reactive trade on the market. Resist that temptation. Do not be trigger-happy. If you feel like doing a trade, stop your hands. Count to 30. Take 5 deep breaths. And see if you still want to do it.
Number 3: Always have a stop loss.
Your stop-loss is not a number in your mind; it is an order in your system.
Number 4: Never trade in an emotionally unstable place
The mother of all mistakes. Enough said.
Number 5: Take the bets which are small enough to get you unemotional
If you are playing with money you cannot afford to lose, your psychology — fear, greed, and anxiety will interfere with your mind. Not a nice place to be in. Keep a level head by taking smaller bets
Number 6: Do not trade to get rich or because you need the money
If you trade with a set number in your mind, chances are that you will not hit it. You cannot trade to get rich. Your only reason to trade should be that the trade has a positive expectation and good odds, and it makes sense.
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5 thoughts on “Improve your trading decisions”
sensible article. Thanks!
Very much appreciate your ariticle on improving Trading decisions. Deeply value your wisdom and knowledge and also sharing it so magnanimously with the common people. However… I shall appreciate if you NOT use the four letter words (Point No. 5) when describing or advising. It isnt necessary. It can be easily understood without using such words. Use words like – curdle or devastate your mind instead. Hope the critisism is viewed constructively. Looking forward to hearing from you on my email address. Thanks and Regards
Very well said