Control Bad Habits with Daily Reminders
Even after a decade of a trading, I still do things some days that go against my trading plan and strategies. Sometime I take extra trades out of boredom, other times I skip trades, and other times I take all the right trades but fail to manage them properly. Regardless of what the problem is, or what causes it (the rationalization is always a bit different), these tendencies need to be reigned in quickly.
Messing up one or two trades is one thing, but it can’t be allowed to go on for multiple trading sessions in a row. Trading is a business, and bad business practices need to be stopped as soon as they are noticed. It’s likely the issue will pop up again down the road, but each time it needs to addressed and controlled as quickly as possible.
Here’s my nightly ritual which may help you keep your particular problem isolated to a occasional mess up, instead of a constant bad habit which will drain your trading account.
Notice Your Issue
There are lots of trading issues, but once you have a plan in place that you should be following (based on tested profitability) there are three main problems:
- not taking trades you should
- taking trades you shouldn’t
- Somehow messing it up once in a trade, by either taking profits too early or too late, or taking on too much risk or trying too hard to minimize risk. With binary options this third point isn’t as much a concern, since risk and reward are fixed at the outset of the trade.
Regardless of the issue, define what is occurring and what is going on when the issue pops up.
For example, maybe you take extra trades when you are bored, or when the market is quiet and moving rhythmically so you think making a few extra dollars is worth the risk of taking a trade based on an untested strategy.
Use the “text” feature on your charts (if available) to write down what you messed up and your basic thoughts at the time of the mess up. If your charts don’t have a writing feature, take a screenshot of each of your trades, save them, and then at the end of the day use a little program like Microsoft’s “Paint” to type in your comments.
Keep screenshots of every trading day, with all your trades and comments, that way at the end of the day you have a visual record what you did, and why you did what you did.
Daily Reminder
Usually right before I go to bed, I write myself a reminder for the next day about what I need to focus on. Usually it is very brief, with what I need to do and how I can do it.
For example, if you have been skipping trades recently and have had to watch in horror as those trades would have produced a profit while you instead sat on the sidelines, then make a simple note for yourself at night.
The note may read, in point form, something like:
-ONLY goal for today is to get into the trades I should
-If valid setup, place order and then sit on hands until the trade is over
-I don’t know what will happen in the future, so I just need to trust my signals and take the trades
The note will vary depending upon your personal issue, your psychology and your ideas on how to overcome the issue.
During the day, remind yourself of these points and let them seep in. Ideally, speak them out loud before and during trades to make sure you are following the advice.
I do this at night because by then I have been away from trading for several hours, and my mind is likely to be clearer after a break, so I can more objectively write a few thoughts that will help me the next day.
The Full Ritual
The daily ritual consists of pointing out issues on my charts, and writing basic comments about my state of mind at the time of the mess up.
I then take screenshots of my charts so I have a record of all my trades, issues and comments to refer back to. Take screenshots of all trades, showing enough data to provide a context for the trade. You may notice issues after the market closes, when you review you trades, you didn’t notice in real time.
At night–every night, even if things are going well–I make a note for myself and put it on my trading desk outlining two or three key things to remember the next day. Most of the time these will have to do with an issue that cropped up the prior day or recently, but sometimes they will just reminders to stay present in the moment, take all valid trade signals or don’t take random (untested) trades.
During the next trading day, I repeat these points, and say them out loud before and during trades so the thought is in my mind and can help prevent mistakes from being made in real-time.
