Below is a brief summary of some critical items to consider for improving trading results:
1) Goals: Document both short & long-term goals for your trading business as this helps to define the path you wish to follow & direct your focus where it is most needed in order to achieve your goals;
2) Trading Plan: Ensure you have a documented AND back-tested trading plan which shows a clear positive expectancy over a large number of trades. If your trading plan does not show clear positive expectancy then no amount of trading psychology, or anything else for that matter, will help in the long run. The plan must include a breakdown of your trade selection criteria, setups & triggers, risk management, money management, trade management etc. Also include record keeping and review processes plus often forgotten items such as contingency plans (eg if your internet provided where to go offline while you’re in a trade, power failure); backup systems; etc. just to name a few;
3) Market Preparation (“prep”): Ensure you prep every market/instrument BEFORE entering any trades. Make smarter decisions up front, then manage your risk and the trade as per your plan;
4) Record Keeping & Review: Ensure you record and review your trades. Without documented metrics you have nothing to objectively review for improvement.
Without adequate record keeping or trade journal you unable to track your System Expectancy, also referred to as your “Trading Edge” for the trades you’re currently placing in the market… REMEMBER… If your trading system does not show clear positive expectancy (both in back testing AND in live trading) then no amount of trading psychology, or anything else for that matter, will help in the long run.
ACTION: Consider creating your own spreadsheet to record your trade results, or using an existing trading journal product such as “Trading Journal Spreadsheet ®”
5) De-Clutter: can consist of both “physical” and “mental” clutter. Clutter can distract us from focusing on what we really need to be doing to achieve our goals, rob us of valuable time, lead to feeling confused or overloaded…none of which is conducive to running a consistently profitable trading business;
6) Health: along with your time, health is the most valuable asset we have. Need balance in all aspects of life.
Wishing everyone a happy, healthy and prosperous 2014.