Active trading, whether it’s day trading or swing trading, can be very stressful, but it doesn’t have to be that way. The difficult part is deciding what to focus on, when the reality is most of us resort to the one thing we know we shouldn’t do, and that’s stare at the screen and overanalyze what we should do or how and when we should act, while we ignore a small number of things we should be doing.
So, what am I talking about? I’m talking about hanging hopes on some kind of market wisdom, like letting winners run. How in the hell do you know when a winner is gonna run, and when to step aside and watch it happen? Or, take quick losses, which seems antithetical to letting things run…the reality is that some of the biggest winners are trades that drew down significantly, only to rebound to explosive heights.
If this is the type of stuff consuming your mind, then I have two things to point out…first, if you’re stressing on your trading, then you’re trading size is probably too big. and second, you’re likely fixated on individual trades, when you should be concentrating on your execution, so whether it’s one or ten positions to manage, you’ve got it down. It’s simple. Trading smaller makes the second thing a lot easier.
Reduce the Mind Clutter
When trading, your only purpose should be trading your strategy. You get a signal that triggers an action, you execute that action. If you have distractions you may miss that trigger and miss an opportunity. And the more strategy triggers you miss, the more difficult it will become to evaluate your strategy and your individual performance. These are important metrics that you need to measure. Otherwise how do you know what works and what doesn’t work?
A cluttered mind is a trader’s nightmare. Your trading will be affected, and not in a good way. So, turn off CNBC or Bloomberg, put your phone on silent. Clear your inbox before you start trading, and focus on the job at hand.
One surefire way to reduce the number of moving parts is to trade using a signal generator. It relieves you of the analysis and decision making, so you can focus on the execution. A signal generator that isn’t time dependent is best, like our PatternCast, it provides signals for the next session, which you can enter ahead of time, go to sleep and wake up and manage.