Specify a trading plan and follow it on a daily basis.
Professional traders have an edge and focus all of their efforts in utilising this edge. They do not enter random trades.
Every trader should have a clearly defined trading plan and strive to implement their edge through following their rules.
The following are some of the factors that can be employed when embarking on writing your trading plan:
Think about how the different areas can affect you and expand on them as is relevant for your trading methodology.
– How do you operate your trading business?
– Document any plans and daily routines. Make a list of what you do on a daily basis and seek to refine the process.
– How does event risk fit in with your trading strategy? Market moving data is released constantly. Intra-day traders may make deliberate decisions concerning how they deal with positions around event risk.
Pro traders wouldn’t generally enter positions established around TA ahead of an interest rate announcement… How is your trading strategy facilitating this? You can take control by defining a set of rules about how you’ll supervise your trading positions during event risk.
– Do you trade if under pressure with external issues? How will you quantify your state of mind? I.e. score out of 5 in a trading log…
– Do you keep a trading journal? This journal should have a trade analysis section which can capture lessons learnt etc. It should also allow you to log what was good and bad about how you executed the position. It is vital that we learn from mistakes in order to improve our edge.
– How will you deal with an IT systems failure? Do you have a diverse internet connection?
– What will you risk on a trade? Do you take current trades into account when accounting for total equity?
– Will you trade correlated pairs? How do you track this correlation information?
– How many losers will it take before you stop for a pre-defined trading break?
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Analyse all of the above and add as many points as is relevant to you. This is an important step towards taking control of your trading.
Further trading psychology and self improvement posts can be read at www.forex-fx-4x.com
