Friday, December 23, 2005
5 Trading Pitfalls and how to Solve Them
By: Doug Hirschhorn, Ph.D. “The Head Coach”
TheHeadCoach@gmail.com
As a trading coach to some of the top traders in the country, I have observed that Losing money doing the right thing does not destroy a traders’ mental focus. It is when they lose money doing the wrong thing…That is what truly eats at their soul and messes with their head.
With that said, the following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls
1. Focusing on the P & L
2. Losing objectivity while in a trade
3. Becoming emotional about a trade
4. Lacking confidence: exiting early, failing to put a trade on, not sizing up
5. Difficulty adapting to a changing market
Solutions
1. Quantify success base on the caliber of the trade (i.e. high quality entries/exits).
2. Continuously ask yourself, “is my original reason WHY I entered this trade still there?”
3. While you are in a trade, ask yourself, if I had no position on right now, what would I do? Buy? Sell Short? Do nothing? Then re-evaluate your trade size and direction.
4. Confidence should always come from within. Step#1: Write bullet list of data points proving WHY you are a skilled trader. Step #2: Prime yourself each morning by reading it over to yourself. Could be the most valuable 30 seconds you spend each day.
5. Flip your perspective by keeping track of what is not working (by default this tells you what IS working).
Keep your eye on the ball and your head in the game!
-- The Head Coach
TheHeadCoach@gmail.com
As a trading coach to some of the top traders in the country, I have observed that Losing money doing the right thing does not destroy a traders’ mental focus. It is when they lose money doing the wrong thing…That is what truly eats at their soul and messes with their head.
With that said, the following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls
1. Focusing on the P & L
2. Losing objectivity while in a trade
3. Becoming emotional about a trade
4. Lacking confidence: exiting early, failing to put a trade on, not sizing up
5. Difficulty adapting to a changing market
Solutions
1. Quantify success base on the caliber of the trade (i.e. high quality entries/exits).
2. Continuously ask yourself, “is my original reason WHY I entered this trade still there?”
3. While you are in a trade, ask yourself, if I had no position on right now, what would I do? Buy? Sell Short? Do nothing? Then re-evaluate your trade size and direction.
4. Confidence should always come from within. Step#1: Write bullet list of data points proving WHY you are a skilled trader. Step #2: Prime yourself each morning by reading it over to yourself. Could be the most valuable 30 seconds you spend each day.
5. Flip your perspective by keeping track of what is not working (by default this tells you what IS working).
Keep your eye on the ball and your head in the game!
-- The Head Coach
