Wednesday, 10 September 2014

Your Trading Gatekeeper

The Key to Success in Day Trading and in life in general, is good gatekeeping.

Imagine a busy intersection.  Now take away the traffic light.    Chaos.  The flood gates open and things get exciting.  Wild.  Unmanageable.   What is needed is some controls to manage the flow.  Just as you need a good gatekeeper when you are trading the financial markets.

I have a couple students right now that are struggling with this.  They know what they are doing wrong, yet they keep making the same mistakes, or new ones again and again.   They aren't thinking clearly.  Their brain is jammed up.  They are overloaded and they aren't realizing it.    It's like being stuck in a traffic jam and sitting and not realizing that a traffic light to control the intersection will help you get moving. In the direction you want.

What you need to do is establish your routine and create a S.Y.S.T.E.M.  (Save Yourself Stress Time Energy Money).  It will help you control your thoughts, your actions, and put important checks and balances in place to ensure you are focused on trading.  Lets face it, if you are not making pips, if you are making bad trades, you are doing something wrong.  And if you keep making the same mistakes again and again, you will remain stuck.  

Your Trading Gatekeeper
First things first you owe it to yourself to take trading seriously, and that involves more than saying you are serious and turning your computer on to check charts and place a trade.  It requires discipline.  You are your own gatekeeper.

When you set your routine, your checklist, your system, you should:
  • Set Boundaries
    • What days and what time will you trade
    • When is your no trade time
    • What Currency will you follow.  Start with one.
    • Move/Reschedule other activities around this time
      For example I don't do Yoga or play Badminton when Markets Open
    • Know when to trade infront of a Computer in an office versus mobile on your phone
      for example, during prime time trading you might be in your office but in slow times you can monitor your trades on your phone.
  • Limit Interruptions
    • Email
    • Facebook
    • Private Messaging
    • Phone Calls
    • Text Messages
    • TV, Music, News
    • Food
    • Kids
    • Pets
  • Checklist
    • Economics Calendar
    • Chart Analysis
      • Monthly, Weekly, Daily, 4H, 1H
      • Trendlines
      • Trend vs. Range Markets
      • Indicators - like your favorite golf clubs, pick and use consistently
      • Study Risk vs. Reward ~ Stop Loss vs. Take Profit
      • When in Doubt, Stay Out!
  • Curb Your Enthusiasm
    • Write down great "Trade Ideas", Strategies, Things you want to try
    • Create Calendar Tasks or Notes to revisit your great ideas later
    • Use a Journal to jot down notes or ideas
    • Set a time when to do your "R&D" (Research & Development)
    • Avoid "tips", Trader Chatter, or any kind of social sites all together
  • Live vs. Demo
    • Do NOT use your Live Account to try something new or gamble based on a hunch or feeling. 
    • If you haven't gone live yet then do NOT use your demo account for anything other than to trade your established strategy
    • Do NOT switch between Live and Demo. Set boundaries. Keep it simple.
The best Gatekeeper is YOU.   You need to set boundaries and control your environment so you can focus.   Day Trading is easy BUT... and this is a big one....  You need to TAKE IT SERIOUS!!  Focus. Be precise. Follow your trading plan and strategy.  Just because you know it works doesn't mean it will work. You need to work at it and be your own gatekeeper!