Becoming a profitable trader is not easy. To make things harder, many new traders develop bad habits, which can really hinder their progress. Below are my top 10 trading habits that any trader should seek to create... These habits can drastically improve trading performance and make your trading experience so much more rewarding!
Check open positions less frequently. Once you've opened a trade, leave it. Don't watch the movement and close of every candle, this will lead to the trade becoming emotional, which spells disaster.
If you swing trade, then checking trades 1-2 times a day should be fine. If you day trade, then checking open positions once an hour should be adequate.
Have a trading schedule. Start, finish and check the charts the same time everyday. Many new traders never develop a trading routine. This leads to them checking the charts too often or having long breaks between trades.
Focus on the long-term. Calculate returns and review your trading performance once per quarter or once per year. Checking returns daily or weekly just becomes frustrating and leads to emotional trading.
Trading is about getting rich slowly. Analysing performance on a daily or weekly basis is irrational and can be soul destroying.
Keep yourself busy between trades. Work, run a business, study or play video games. Being busy between trades will help to keep your mind occupied and your emotions focused on something else. As soon as emotion becomes involved in trading, everything will go pear-shaped.
Take holidays. I take 3 full months off trading every year. This allows me to get re-motivated and enjoy other interests. If I don't take long breaks from trading, I find that trading becomes chore-like and tedious - trading should be enjoyable and fun!
Have regular breaks. Going for a walk, eating lunch away from your desk or reading a novel on the sofa are some great ways that I choose to break throughout the day.
Plan for success but have no expectations. A lot of trading emotion comes from expectation. Traders expect the next trade to be a winner, they expect this month to be profitable, they expect the USD to become bearish, etc, etc. Having no expectations can really help to reduce trading emotions. Obviously, you should still stick with a strategy and do all you can to success, just don't expect to succeed. Success will come as you unemotionally stick with a strategy that gives you an edge.
If you have a big winning trade, celebrate. Once a trade has closed that has had a major impact on your trading performance, have a break to celebrate the victory. This prevents you giving back winnings to the market. If also prevents you becoming complacent and opening the next trade without the needed thought and analysis.
If you have a big losing trade, commiserate. Once a trade has closed that has had a major impact to your trading results, have a break to commiserate the loss. This prevents you revenge trading and trading with anger or frustration. Quite often, a short break and eating something unhealthy will help you realise that things are not as bad as you may have thought.
Keep motivated. I find the best way to do this is through reading trading related books, watching trading related movies or watching trading related YouTube videos.
Samuel Morton is a full-time trader, specialising in Forex and derivatives. He is the owner of the love-the-pips, a senior technical analyst for a Forex broker and owner of his own proprietary trading fund.
You can learn more about Samuel and his way of trading here.