Can you forget how to trade?
Well if you view trading as simply pressing the Call or Put button on the broker’s platform then you are not likely to forget how to do that.
And even if you do there is plenty of assistance on brokers’ site to remind you how simple it is.
The problem of course is that placing the trade is only a tiny part of trading and by far the simplest among the many stages.
I’ve written before about the various stages of trading here. You’ll soon realise that it is very easy to forget large parts of the process of trading unless you have a good written plan to guide you.
But the plan is not all that is required. Because trading is primarily a mental activity it stands to reason that a large part of the process revolves around your mental state.
And it is quite easy to lose track of the correct mental processes, even if you are trading regularly.
Errors can creep in. And so you need some sort of system to keep a check on how you go about thinking about trading and engaging in the mental process.
So having a way to keep learning is not enough. You must also work to avoid slipping backwards and forgetting to do what you already know.
Here are a few tips to help you to remember what you know about trading:
1. Choose a trading method – a plan – and stick with it.
Don’t constantly tinker with it unless you find that there is a definite flaw or that there is a better way to do something. Make the method work.
If you experience losses don’t immediately assume that there is a problem or, if there is, that you can fix it. Of course, if your system is not working then start again. But only try to use one method at a time.
2. Have a clear decision making process.
Leave nothing in this to chance. Know what decisions you will have to make and the basis on which you will make them. And ensure that the plan does not cause you to revisit decisions you have already made.
3. Get you trading environment right.
You must have a comfortable place to sit and to think and make decisions. You must have a clear mind, where trading is the priority and distractions are minimized.
Limit your trading to the times when you can achieve this. And when you are trading then stay focussed. If you are unsuccessful because you find that you are being distracted or can’t concentrate then that is your failure. You must get this aspect right just as you must learn how to find trades.
4. Have all your decisions made before you enter the trade.
Make sure you will have all the information you need before you even think about trading. This includes market data but also how much risk you can take.
Know precisely why you are entering a trade and be definite in your decisions. Trust your process. Know what time period you are going to use and how much to stake long before you even consider timing an entry.
5. If you don’t feel good about any of the above then don’t trade.
If you start and then begin to feel uneasy about the market then don’t trade. Not trading is a positive decision and a viable outcome for the decision process. Not finding a trade is not a failure.
6. Always take full responsibility for every trade no matter how it turns out.
All the decisions are yours. And if some unforeseeable event causes the market to turn against you, well, that’s just a part of trading.
Never rationalize errors. Deviations from your plan are errors and should be avoided. They must never be justified. Never act randomly.
7. The trade is not over until you have recorded and reviewed it.
Why did it work? Why did it not work?
Did you do everything correctly?
Have you learned anything from the trade?
Always remember that there is no objectively perfect trading system out there. You need to have a system that best suits you and then make it work.
If there is a problem it may well be that the problem is with you, not with the system. The only way you will find out is to keep implementing a system as fully as possible.
Then even if you make an error or forget something you system will have become a routine and deviations will be much easier to spot.
Make record keeping a central part of your trading. Click below for vital information.