Ask These 10 Questions Every Trade

If you are just arbitrarily trading what you like without any real underlying process, procedure or strategy,  the long-term odds of success are small.

It is important that you create a system or strategy for yourself that helps you to trade in a manner that consistently works, reduces risk, and does not destructively put your ego and emotions into your trades.

Here are 10 questions you need to ask yourself, every trade:

  1. How do I define my trading style? Day Trading or Swing Trading, Breakout, Trend Following?
  2. How much money will I risk?
  3. At what price will this trade become invalidated?
  4. Why am I going into the trade here?
  5. Am I determined to persevere in trading regardless of the results in this or any significant trade?
  6. How am I going to get out of this trade? A price target or trailing stop?
  7. When my invalidation point is struck, will I be able to admit that I was wrong and quit the trade or might my ego cause me to hold and pray?
  8. Could I handle the loss emotionally or will I accuse the market?
  9. What is my portfolio’s chance of destruction based on my at-risk capital?
  10. Should I gamble this cash in trading or do I need it for future bills?

More than anything else, your responses to these ten questions will decide your progress.

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