If you have the opportunity to review your past trades in your trading journal, you will likely be able to identify some bad habits that are preventing you from winning some of your trades.
And if you haven’t even started recording your trades in a journal, grieve! Haven’t you read the section on the importance of trade journals in our wonderful school of Pepsiology!?
If your trading journal is full of bad trading habits, don’t worry now.
What seem like bad habits may just be one major problem that manifests itself in many different ways.
Before you start dealing with all those bad habits, try to see if there is a common characteristic among those problematic patterns.
For example, Newbie Ned went through his trading journal and identified three bad trading habits: setting his stops too tight, closing his winning trades early, and being reluctant to make correct trade setups.
But after a few episodes of Ted Lasso, he had his big moment and realized the three habits could be boiled down to one major problem – his fear of losing. That’s three birds in one stone for breaking pipes!
Of course, it is not enough to identify your main hurdle in trading. You also have to act accordingly. So where do we start? Here are some suggestions:
1. Speak out loud
A great way to start attacking your bad habits is to catch them while they’re happening. For many traders, speaking out loud helps.
For example, Newbie Ned notes that he is more concerned about his unrealized losses than focusing on the trading framework and market behaviour.
His usual reaction is to cut his losses even though the price hasn’t hit his stop loss yet. But because he realized he was about to slip into his old habits, he could now choose to actively fight his impulses.
2. Record your trades
If you’re not in the habit of talking out loud while trading (or if you don’t want to sneak up on other coffee shop-goers), you can also write down your thoughts.
This may take a few minutes of your graph time, but writing down your thoughts and feelings will have the same effect in pushing you into the third person as speaking out loud.
After all, it’s hard to miss the nudge when you see you’ve been typing.price yo go down faaaaaaast?! I want out now!in your diary.
3. Step away when needed
Once you have identified the moments when a bad habit appears, the next step is to try to get rid of it.
Some traders look away from their screens and take deep breaths when faced with the trading experience, while others leave their trading desks completely to do non-trading activities for a while.
The business plan is entirely up to you, of course. Heck, you can even play on Nintendo Switch or meditate if you want to.
Just know that tackling trading hurdles always takes effort, but it is definitely a small price to pay to become a consistently profitable trader.