Series: Mental Roadblocks of Day Trading
Trading is very much the tortoise instead of the hare. Plodding toward a far-off finish line is more likely to create more discipline on a daily basis. We have written before that it is vital to keep your trading sights set on a long-term objective as opposed to a daily agenda. But trading is a different kind of career than most. Here are some specific tools to help you create your goals.
1. At first, make your goals non-monetary. In sales, a monetary goal is an acceptable measure of success. In trading, especially for new traders, this type of goal can be ambiguous and misleading. In extreme cases, traders will take undue risks in order to reach a monetary goal instead of focusing on trading correctly and systematically. Now do not confuse this statement with wanting to make money! You still want that vacation or your daughter to go to that great college but the only way to reach these goals is to build a strong foundation of trading in the most precise and correct way possible.
2. After every trade, ask yourself “Did I execute my trade perfectly?” - regardless of whether you made money or not! If you deviated from your system, you know it – even if the trade was a winner, you did not trade well. Your instincts should play no part in your day trading. They have another word for using your instincts in day trading – it is called gambling! Focus on trading perfectly every day and the money will come.
3. Look at results on a weekly, or even monthly, timeframe. Let me warn you ahead of time, this is hard! Every day, you will have the impulse to tally up your trades and see how you fared. The danger in doing this is getting emotional about your trading. Having a bad trading day may not only affect your personal life, it may also affect the way you trade the next day. The same is true for an up day. Every trade should have a clean slate.