How To get rid of Bad Trading Habits

Tuesday, December 13 Leave a Comment

All traders should have a good trading plan. One of the worst bad habits a trader can have is trading impulsively and without any guidelines. Traders who take the time to make a trading plan are much more likely to succeed, but even with a plan in place we can develop bad habits. A trader will make impulsive trades even with their plan taped to the wall next to them. They may exit winning trades too quickly or let losses go longer than their plan states they should. In this article we will go into how we can change our bad habits. The process involves how we personally view our successes and failures, as well as the rewards and punishment we give ourselves based on these views.

In order to break bad trading habits, traders need to base success or failure on each trade by how they stick to their trading plans and not simply on whether they make or lose money.
 
  • If you make a bad trade (that is, an undisciplined trade, one not part of your trading plan), but make money on it, you still have to view that as a failure; you cannot congratulate yourself. By congratulating yourself, you are offering a small reward for something done incorrectly.
  •  If you make a good trade (one that fits your trading plan perfectly), and you lose money on it, you have to view it as a success because you followed our plan. It's more likely we berate ourselves even though we followed the plan; in other words we punish ourselves for doing what we were supposed to do!
If you lose money,


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