Breaking the Bad Trading Habits to Increase Performance
Whether you are a beginning trader or a seasoned one, it is easy to entertain bad habits that are keeping you from your full earning potential. It’s most likely that you don’t even realize that specific behaviors are holding you back. Instead of looking at the realities of a potential trade, you could be seeing something different through filters you have established. These can become habits that will affect the decisions you make when trading. Don’t be held back by bad habits! Learn to recognize them so you can experience better outcomes on your trades. In other words, read on for ways to get more bang for your buck!
Identifying Your Bad Trading Habits
Before you can begin to change your habits, you need to identify them. Take the time to look carefully into the way you trade and you can begin making small changes that will materialize into higher profits. For instance, are you guilty of overtrading? This is usually only a fault found in newbie traders, but the sooner you recognize it the better. Overtrading can be a result of trying to meet a daily quota, which a more experienced trader would not do. If you’ve had a bad trading session, you might give in to the urge to put out a lot of trades in hopes that one will bring success. Bad idea. Revenge trading can be in the same category. What is important is to spend time working out your trading rules. Then be hard on yourself! Evaluate each trade to check how it fits into your trading rules. Don’t fudge or find a way around them. Use them to your benefit! This will keep your own emotions or time pressure out of the equation.
Benefiting from Your Trading Journal
Being diligent with your trading journal is where you will get the best picture of your trading style. Be honest so you can catch those bad habits. Go through the trades and evaluate them according to your trading style. Do they all line up with your style, or are you jumping out of the rules and placing orders on a whim? Or have you been guilty of bypassing your rules and entering trades purely on emotion? Sometimes a trader will enter according to the trading rules but then jump the queue by not following the rules to the end. This can mean staying in a trade too long or leaving too quickly and losing. Your trading journal is your friend here. Take an honest look at your trade entries and exits to evaluate what went right when you are trading according to your own set of rules and those that went against your trading style. Always look for trading bonuses, to ensure you are getting the maximum benefits.
Replacing Bad Habits
Once you have studied your trades to see where they went wrong, make a decision to correct them. Most likely, you were not adhering to your own trading rules. Make it a commandment to yourself to spend one month trading strictly according to your rules. At the end of the month, you can pat yourself on the back while you tally up your profitable trades.