Create A Checklist To Become A Trading Master
Your trading plan can't be complete without a checklist. If you already have a plan for trading, that's fantastic. Now it's time to go a step further and make a list of things to do. You will look at it before every trade, and you won't enter unless everything on the list is there.
There are different kinds of trading plans, and they can be 5 pages or 50 pages long. No matter how long it is, it will explain your overall strategy.
Unfortunately, it's easy to break your rules "just a little bit" when you're trying to use your edge in the market. Before you know it, you're making trades that have little to do with your actual trading setup.
Most traders lose money not because their strategy is bad, but because they start taking random setups outside their trading edge. Usually, it doesn't take more than a few hours of trading based on how you feel.
So, it's important to have a short and clear checklist, usually no more than ten sentences, that describes your trade entry point by point. You can even look at every detail before making a trade (I do it).?
Eventually, you'll remember that checklist perfectly, but it's also important to follow it honestly without double-checking every time. The skill of following rules is a different topic.
Without a list, you're gambling
How many traders are always looking for "something else" or another trading strategy? Instead of getting really good at one idea, pattern, or trading system, they will jump to the next one as soon as they start to lose money.
They have been running on the surface for years instead of getting to the heart of trading, which, in my opinion, is the perfecting of one strategy.
I think you will agree with me…
Sometimes they even find something that they like, and that starts to work. But then, some time goes by, and he can start to break his rules if he feels any kind of emotional stress, like happiness after a win or fear and anger after a loss.
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A beginner can be so emotional that, over the course of a few hours, he might make a bunch of random trades that wipe out a big chunk of his account.
There are a lot of other reasons for this kind of inefficiency, but a checklist is one of the first things you can do to fix it. Because if you don't know what you're looking for on the market, you'll take the first trade you find.
Thinking "right or wrong" is flawed
You can only be right if you stick to your rules, and you can only be wrong if you choose setups at random.
Again, if you have a loser but followed your setup, you're right, and if you have a huge win but it was a random trade, you're wrong, because this is not a stable way to trade in the long run.
Yes, traders can sort of guess how prices will move, but only because they follow their rules and use their system.
A trader won't be set on his predictions, and he won't expect the market to follow his colored drawings just because he drew a box or a line.?
A trader's job is to take a setup based on his experience and testing, and he should let go of his expectations and his trade, managing along the way, of course.
I think this is a very deep question that needs a post of its own later. So, the next time you hear someone ask, "Sir, should I buy or sell?"
", you can be sure that the person is just starting out on their journey.
Wish you all a profitable trading!