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:
- How do I define my trading style? Day Trading or Swing Trading, Breakout, Trend Following?
- How much money will I risk?
- At what price will this trade become invalidated?
- Why am I going into the trade here?
- Am I determined to persevere in trading regardless of the results in this or any significant trade?
- How am I going to get out of this trade? A price target or trailing stop?
- 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?
- Could I handle the loss emotionally or will I accuse the market?
- What is my portfolio’s chance of destruction based on my at-risk capital?
- 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.
Thanks for reading! Consider the following:
Free Trading Resources: http://bit.ly/PurdyAlertLinks