Sunday, March 29, 2009

Traders Checklist

Brett Steenbarger is a trader who has a blog that helps traders achieve their potential; and he has come up with a trader's checklist that I believe will help me in this journey of trades.

1) What is the quality of your self-talk while trading? Is it angry and frustrated;
negative and defeated? How much of your self-talk is market strategy focused,
and how much is self-focused? Is your self-talk constructive, and would you want
others to be talking with you that way while you’re trading?
2) What work do you do on yourself and your trading while the market is closed?
Do you actively identify what you’re doing right and wrong in your trading each
day—with specific steps to address both—or does your trading business lack
quality control? Markets are ever changing; how are you changing with them?
3) How would your trading profit/loss profile change if you eliminated a few days
where you lacked proper risk control? Do you have and strictly follow risk
management parameters?
4) Does the size of your positions reflect the opportunity you see in the market, or do
you fail to capitalize on opportunity or try to create opportunities when they’re
not there?
5) Are trading losses often followed by further trading losses? Do you end up losing
money in “revenge trading” just to regain money lost? Do you finish trading
prematurely when you’re up money, failing to exploit a good day?
6) Do you cut winning trades short because, deep inside, you don’t think you’ll be
able to make large profits? Do you become stubborn in positions, turning small
losers into large ones?
7) Is trading making you happy, proud, fulfilled, and content, or does it more often
leave you feeling unhappy, guilty, frustrated, and dissatisfied? Are you having
fun trading even when it’s hard work?
8) Are you making trades because the market is giving you opportunity, or are you
placing trades to fulfill needs—for excitement, self-esteem, recognition, etc.—that
are not being met in the rest of your life?
9) Are you seeking trading success as a part-time trader? Would you be seeking
success as a surgeon, professional basketball player, or musician by pursuing your
work part-time?
10) Can you identify the specific edges you possess over the many other motivated,
interested traders that fail to achieve success in the markets? Do you really have
an edge, and—if so—what are you doing to maintain it?