TradeOutLoud

Trading

A Checklist for Healthy Trading Habits

Filed Under: Trading | | Anka Metcalf

All successful traders will say it is important to have a system in place that enables us to automate and organize our actions throughout the trading day.

This trading system should be a well greased machine that should function based upon a few essential components: healthy trading habits fueled by proper mindset (trading psychology), money management  (your ability to manage risk) and method (implementing with ease your trading strategies).

Implementing healthy trading habits and routine will help with all the components above. Successful trading is all about respecting key rules to minimize stress. Healthy trading habits results in excellent results.

Here are some of my healthy trading habit tips.

1.    Have a plan before you initiate a trade. A detailed trading plan is your blueprint to success. It will help you define you as a trader, the way you trade, will help you find, execute and manage trades with ease and most importantly will help you put the education puzzle together.

2.    Always analyze all closed trades, winners and losers. Having a trading journal will help you identify what works for you and what not; it will funnel you in the right direction. It is by far the most helpful method of personal trading introspection.

3.    Maintaining a positive trading attitude will improve your money management and risk management skills. A negative trading mentality will alter your thinking and mindset. Your attitude will determine whether or not you are profitable with your trading. Your attitude is more important than your market knowledge and even your level of experience. It is important how you react to the market and not what the market will do to you.

4.    Controlling Emotions. Emotional swings and emotional stresses impact your mental state of mind and will affect your trading decisions. When you trade with emotions you don’t trade clearly and rationally. Some books talk about separating your emotions from trading. But how is this possible?  To even try to separate emotions is like fighting a losing battle, taking control over them that is a different story. Trading involves the most emotional COMMODITY in the world which is….money. Money outlasts hate, love, greed and anything else you can ever imagine. The only way to control your emotions as a trader is to have a solid trading plan.

5.    Trade in the zone –Focus is key in trading. Make sure you are do not have any distractions around, no internet browsing, no phone answering, no kids playing, it should be just you and the charts. Let the charts speak to you and they will tell you what to do.

6.    Have the right tools. Trading and the whole psychology is hard enough, having to worry about an unreliable trading platform, poor charting and layout, bad internet connection can take a hard toll on your trading and the future success of your business.

7.    Position sizing. Maintain a healthy position size for your account. Recommended size is 1 to 2% of the capital risk on a trade. This is the one thing that will make or break your trading account.

8.    Develop and cultivate discipline. In my opinion this is the most important element of trading. Discipline is translated in the ability to follow your trading plan. Discipline is the essence of all of the psychological issues. All the rules and strategies do not count if they are not followed to the T. Discipline is what differentiates a successful trader from a trader that struggles.

9.    Patience. Take time to evaluate your plan before even thinking to place a trade, analyze market conditions before pulling the trigger. Patience is one of the key qualities you need to have in order to be able to deal with different situations in trading from the point you decide to enter your trade, to how you manage your trade to setting and waiting for your targets.

“I just wait until there is money lying in the corner and all I have to do is go over and pick it up. I do nothing in the meantime. In essence, by not wanting to trade, I have inadvertently transformed myself into a master of patience. By forcing myself to wait until there was a trade that appeared so compelling that I could not stand the thought of not taking it, I had vastly improved my odds.” Jesse Livermore

10.    Market conditions. Always respect market conditions and take what the market offers you. Never try to outsmart the market.

11.    Alleviate impulse and revenge trading.

12.    Keep it simple.

13.    Never force a trade. If you have to squint at a chart, it means that the trade is not there, move on to the next possible trade.

14.    Gain confidence. Confident traders rely on their own judgment and not what others are saying.  Take full responsibility for your trading decisions. Being successful requires you to trust and follow your own trading plan.

Regardless of what instrument you are trading whether it is stocks, futures, forex, it is important to develop healthy trading habits right from the beginning, this will fast track your trading to success and profitability.  Developing healthy trading habits is as important as your trading strategy and personal trading plan. Having the right approach and self discipline is what makes a trader successful.

What trading habits would you add to this list? I encourage you to leave your comments.

CFTC REQUIRED RISK DISCLOSURE STATEMENT

TradeOutLoud LLC, its employees and/or affiliates shall under no circumstance be liable to any user, client, visitor and/or third-party for any losses of any kind including but not limited to: trading losses, lost profits or other damages. All information provided by TradeOutLoud.com website, blogs, emails, social media – past, present and future) is for education purpose only. TradeOutLoud LLC is not a registered advisory firm. TradeOutLoud LLC is not responsible or liable in any way for any content delivered via any of our services, emails, website, social media, blogs, articles or any publication of any kind. Although we provide rules for user conduct and postings, we do not control and are not responsible for what users post, transmit or share on the service and are not responsible for any inaccurate, offensive, inappropriate, obscene, unlawful or otherwise objectionable content you may encounter on the service. The Company is not responsible for the conduct, whether online or offline, of any user. Sharing, re-transmission and/or copying of TradeOutLoud LLC information, trades, comments, portfolio performance, passwords (on other websites, chat rooms, social media, blogs, etc) or any other TradeOutLoud LLC materials is expressly prohibited and it is subject to copyrights owned by TradeOutLoud LLC and protected by copyright laws of the United States – Immediate termination to the service will occur and any infringement will result in legal action. All Trading Signals and ongoing trade management delivered via private Twitter streams, direct messaging, email, or other means of communication are for educational purposes and should not be construed as a trade recommendation or investment advice of any kind. We are not registered or licensed, if you feel the need to seek advice consult your financial planner, adviser or broker.

CFTC Rule 4.1

U.S. Government Required Disclaimer: Commodity Futures Trading Commission. Futures, options, stocks, ETF’s trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, stocks, ETF’s or options. This website is intended for educational purposes only. We are not registered investment advisers and in no way associated with any FINRA broker/dealer. The past performance of any trading system or methodology is not necessarily indicative of future results.

Simulated Trading

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets Last updated June 13, 2019, in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect trading results. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown in any simulation. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk of actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses is material points which can also adversely affect trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. Futures, Stocks, ETF’s, and options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex, Futures, Equities, ETF’s and Options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell Forex, equities, futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not indicative of future results. All trades, set-ups, patterns, charts, etc., discussed in this advertisement and the product materials including website, chatroom and TradeOutLoud Twitter stream(s) are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or TradeOutLoud LLC or any affiliates and or employees. The past performance of any trading system or methodology is not necessarily indicative of future results. For the avoidance of any doubt, TradeOutLoud LLC and any associated companies, or employees, do not hold themselves out as Commodity Trading Advisors (“CTAs”). Given this representation, all information and material provided by the TradeOutLoud LLC and any associated companies, or employees, is for educational purposes only and should not be considered specific investment advice.

Risk Disclosure Statement

Copyright © 2010-2023 TradeOutLoud LLC. All Rights Reserved
Risk Disclosure Statement   |   Privacy Policy