The Daily Trading Coach
Traders will have difficulty adhering to the rules they create because they lack the emotional force driving real change. They need to do it, not just want to do it. Without the momentum of emotion, relapse is the norm.
Set daily goals. You can’t be or feel successful without achieving goals so create goals every day and week to give yourself something tangible to complete and build your confidence.
Outline strengths and weaknesses for every trading day. Identifying what you do right and wrong each day is a good way to develop good habits, rid yourself of bad ones, and build your confidence for doing certain things well.
Embrace your shortcomings as part of your humanness and what makes you you. Every losing trade is there to teach you something about yourself and denying or ignoring that is depriving you of your full story and from growing.
Change your pattern of thinking by seeking out divergent views and trading styles. Also zoom out and look at the broader picture of markets and trends to contextualize everything else
Create relative rather than absolute goals and strive for small improvements everyday. Even if you aren’t successful, just try to be better than yesterday by setting obtainable goals each trading session.
A good trading day is not a day where you make money, it is a day where you follow sound trading practices.
Keeping a psychological journal mapping out your feelings and thoughts on every trade as it transpired can be just as important as keeping a traditional journal.
When you feel emotions surface during your trading, don’t ignore or shun them. Ask yourself why you feel the way you do and if those feelings are reflective of some real change or danger in the markets.
Find your market niche whether it’s your specific strategy, markets, or time of day. Find what works with your style and personality and only swing for the pitches you believe will be home runs. Knowing when and what not to trade is just as important as knowing when and what to trade.
Volatility in markets fluctuates periodically and your strategy should take that into account. Tighter stops in periods of low volatility and more generous price targets in periods of high volatility shows a flexible and intelligent adaptation to the market environment.
If you lack energy, you will lack focus; if you lack focus, you’ll lack intentionality; if you lack intentionality, you’ll lack the ability to follow your trading plan. Ensuring you have the energy to trade effectively is just as important as having a plan.
Every trader finds a way to make their trading uniquely theirs. Don’t be afraid to embrace what makes you different and trust your intuitions.
Traders often think they are managing their trade when they exit prematurely when they are actually managing their thoughts and feelings about the trade.
Holding strong through paper profits can be harder than entering. You need confidence in your trading to trust it to the end and you need to make it to the end to reach your profit levels if you want to outpace your losses.
Don’t view winning streaks as a reason not to reflect on your trading. Identifying your strengths and reinforcing those to improve even more or capitalize on the money making opportunity could dramatically improve your results.
The desire for self-improvement is different from the desire to make money and far more important.
Identifying patterns within your patterns can lead you to recognize many of those problematic patterns are actually the result of one problem pattern manifesting itself in many ways, such as negative self-talk leading to issues sticking to stop-losses, managing risk, or trading with confidence.
Be mindful of your trading frustrations and trace them back to specific problems you can address or avoid in the future.
You can’t follow a discipline that you never formulated in the first place. The clearer your rules and the more you feel them, the stronger they will serve as brakes to your worst impulses.
Try to visualize specific trades and circumstances going well and poorly to prepare yourself for reacting appropriately. Visualizing success and failure in detail can help you navigate both of them more effectively.
Avoid using ‘I’ and ‘me’ language when you’re trading. You don’t want to be self-focused when you’re concentrating on the markets.
When hope enters the picture during a trade, it’s a sign the trade is ill fated. Use your hope-meter as an indicator for when to exit or avoid trades.
When talking to yourself about your trading failures, act as if you’re talking to a friend and attempt to be supportive and constructive rather than overly critical.
Try to frame losing trades as paying for information about the markets. Whether it's information about the sentiment/direction of the market or about your own strategy or feelings, you paid to learn something you can apply to future trades.
Creating catchphrases around your best trading habits can be a great way to cement them in your behavior or just act as helpful triggers to reinforce positive patterns.
Volatility affects trading psychology just as much as winning and losing so try to minimize major swings in your account in either direction. Steady, consistent profits are far better for psychological performance.
Markets are always changing and it’s important to diversify your ways of making money. An edge you have may not last forever and constantly experimenting with different assets, timeframes, and strategies will ensure you can remain competitive as the market evolves.
The best way to hone in on your trading is through statistics. Track your trades and let data show you what works and what doesn’t.
You don’t need to have a huge edge in markets, you just need a consistent one.
Once you’ve entered a trade, you should carefully watch for new information to present itself that might invalidate or further validate your hypothesis. Keeping a watchful eye can help you cut losses early or add to positions that look to be panning out.
You have to trust your trading system. Even the best trading system will produce losses in the hands of a trader who does not believe that it works.
The value of a trading journal is in its review, not just its writing. Journal entries should act as lessons you can look back on in the future.
Find a community or seek out colleagues with whom you can share ideas and work to grow your abilities by learning from one another. Trading can be a lonely activity and finding a support system to propel you forward can be extremely helpful.
It’s okay to be emotional, it’s not okay to let your emotions change your management of risk.
If you’re going to be successful in trading and in life, you’ll need to sustain a healthy relationship with yourself by focusing on your successes every bit as much as your failures.