Thursday, May 14, 2009

Three Questions For the Start of the Trading Day

Here are three questions to ask at the start of the trading day:

1) Am I bringing baggage to the day's trade? Am I carrying over frustrations from losing money or missing opportunity? Am I feeling particular pressure to make winning trades? Am I locked into a view of markets because those views haven't been paying me?

2) Am I prepared? Have I identified significant price levels for the day? Have I gained a feel for how various markets have been trading overnight? Do I know if economic reports are scheduled for the day and what the expectations are?

3) What am I working on? Do I have goals for the day? What have been the mistakes I've been making that need to be corrected? What improvements have I made that I want to cement? What kinds of trades have been working best for me, and am I prepared to actively look for those?

The idea is to become a good self-observer: it's harder to get locked into negative patterns if you're standing apart from those patterns. It's also easier to enact your best trading patterns if you're fully aware of them. Just asking where your head is at when you're trading helps you interrupt patterns that hurt your trading.