7 Tools That Will Help You Boost Your Trading Skills and Profits
|Nearly every successful trader keeps a trading journal. They know it is one of the most powerful things they can do to influence their trading skills and, ultimately, their profitability. Most traders, however, don’t understand how to keep an effective diary. Here are seven tools you can use to help put you into the realm of the profitable trader.
1. Do the numbers. Keep a notebook of your key markets. It’s simply not enough just to look at charts. Write down the high, low, close, & volume of the markets you follow and your most important indicators. Not only will this practice help you keep in tune with your market, you will actually be surprised at how quickly you will hone your tape-reading skills.
2. Record all trades. You must do this. It is fundamental to a trading journal and essential to all the potential transformation that flows from it. Just do it!
3. Record your thoughts and feelings on every trade. If you want to understand your trading psychology, this is the authentic pathway. Thoughts and feelings shape behavior. Just as there are tradable patterns in the markets, there are patterns in your thoughts and feelings that prompt you to trade in a certain way. Learn these.
4. Identify your strengths and limitations. You need to know what you are good at and can rely on, as well as where you reach your current limits. Link your thoughts/feelings/behaviors to each.
5. Develop a plan to overcome your limitations. This is the whole point of your trading journal. Pick one limitation that you want to change and develop a plan to address the thoughts and feelings associated with that limitation. Look to your strengths as guidance in altering what is holding you back. Specify the steps needed to make this a reality tomorrow and into the future.
6. Track your personal performance. Your personal data shows progress and also reveals problematic areas to improve. Track your wins vs. losses and related data (e.g., average win/average loss; wins & losses in an uptrend vs. downtrend vs. trading range, etc.). Do you now see why #2 is so vital to you as a trader?
7. Make journaling a part of your routine. Write your diary at the end of every trading day. Each week, month, quarter and beyond, review your journal to identify areas to work on as well as your progress. Like a runner who can’t go a day without a run, you will soon become a trader immersed in the process of self-development and profitability. You are now on the path of the master trader!
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