Especially when dealing with money, traders can sometimes develop self-destructive habits. As stocks jump up and down in price throughout the day, they can take hold of your mind and begin to play you like a fiddle if you are not careful. That’s why it’s so important to learn how your emotions will react to various market conditions.
Is It Possible You Secretly Want To Make Bad Trades?
Of course it is! Trading sounds so glamorous when you start. You’ll talk about how you day traded this stock or bought an option that went up 100% at the neighborhood BBQ. Then, without the right system in place, your subconscious mind will start to take over before you know it.
Slowly the thrill will wear off if you are not careful and you’ll actually start enjoying talking about how “hard” or “difficult” it came be. You will imagine losing money versus making money. You’ll start to make excuses for your failures; regular job getting in the way, too tired, not enough money, etc.
When you reach this point your mind is now thriving off the failures and you need to have an intervention!
The Solution: Keep A Journal
I know it sounds cheesy and honestly it might be a little stupid at first, but it’s well worth the effort and slight embarrassment to outsiders. If you are going to start trading like a professional, you need to develop professional habits. The most important skill is of course control over your trading psychology.
See yourself as a successful and professional trader at the start of each day. Take 5 minutes to visualize the charts, you positions, entires and exits. You are alert but calm.
I have a journal that I keep at all times. I don’t write in it each day (or even every other day). But when a trade or chart strikes me I’ll put down my notes and emotional thoughts. Then I’ll go back and re-read my notes from weeks and months ago and realize that my emotions really have everything to do with how profitable I am.
Low Risk – High Payoff Technique
The advantage of visualization and journaling your thoughts is priceless. It costs you practically nothing to start and yet the payoff can be great (thousands of dollars in profits potentially). As a trader we are always looking for the best risk/reward trades right? Why not make this a top priority this week? What do you have to lose?
Watch The 1st Video In This Free 4-Part Series
I’ve been told by tons of people that you’ve got to either have a lot of money or a really killer system to trade options and win. Some new indicator or signal that will transform your portfolio.
Honestly, there is no “magic secret” to trading options. It simply comes down to an understanding of risk management, option pricing and strategy selection.
Instead of learning these lessons the hard way (i.e. losing your shirt in the market), why not take my free 4-part video course as I cover each area in detail. Plus, I’ll go over the exact checklist I use for selecting trades each month!