4 Point Checklist For Your Trading Day

You won’t always be able to take everything that’s there when the markets are good, but if you know when to push a trade, you’ll probably see some of your good days turn into great days.  That said, taking a few winners and then stopping for the day is going to mean leaving a lot on the table on these days.  But, on other days, it can mean saving a lot of money and hassle.

So how do you decide whether to carry on trading when you’ve hit a certain level of profit.

Even if you don’t have a daily profit target or set number of trades as we suggest with “Power Of Quitting“, the chances are you’ll have a figure you naturally become happy with.   You may also get a “gut feeling” to keep pushing and it pays off.  On occasion, you’ll make money and you will lose money.

What usually happens is you finish break-even on the day and high commission costs.  I won’t even go into the added psychological costs of concentration, stress, and watching profits evaporate.

Close The Chart Or Continue?

The issues which must be addressed in order to assess whether it’s a good idea to stop or continue trading are:

+ Market conditions turning sub-optimal

+ Mentally shutting down

+ Being emotionally opposed to continuing to trade

+ The “I should’ve stopped” thoughts after the losing trades come

Let’s take a brief look at each of the issues before moving on to how to decide whether to continue.

Market conditions turning sub-optimal

This is perhaps the most obvious issue when it comes to pushing yourself in attempting to have a “big” day. Sometimes there’ll be some good movement early on due to economic reports and sometimes there’ll be market moving speakers which temporarily elevate the level of volatility. When it’s all over and the markets begin to crawl, if you’re still trading it like it’s moving , you could find yourself in trouble.

Mentally shutting down

There are two aspects to this.

First off is having switched off after hitting an acceptable or good target. You’re no longer watching the markets with the same levels of attention and your mood has become relaxed. Trading from this point on is potentially devastating if you’re not careful. You could well end up turning a decent up day into a big down day.

The other aspect is when you’ve already exerted a lot in terms of effort and emotion. The same applies as with the first aspect although you’re  less likely to want to continue to trade. If you’re not sharp or able to concentrate, your odds of trading effectively decrease significantly.

Being emotionally opposed to continuing to trade

Let’s say you’ve had a bad run, or maybe it’s Friday afternoon and you’re looking forward to the weekend to unwind.  You’ve made some nice profits on this day and you want to bank it. If you’re on a bad run, one good day can reset everything for you.  Take the profits and call it a day.  Get onto a string of positive days and you will find your mental state rapidly improving.

When you’re at that point and you want to stop, your emotions are heightened. Trades are less likely to be as objective. Every tick against you becomes an emotional drama.  When you have the opportunity to lessen the psychological load, do so.

The “I should’ve stopped” syndrome

When you’ve wanted to or felt it might be good to stop but you’ve carried on trading and lost it all, it’s pretty easy to beat yourself up about it. It’s what I call the “I should’ve stopped” syndrome and it’s definitely not a great feeling. But what’s worse is that there’s no bias to this feeling.

Whether or not you did the right thing and traded in the right way, because you felt unsure about continuing to trade, your mind tells you that you’re a bad trader! “I was too greedy” or “I was dumb to carry on” are common and destructive thoughts. To break out of this train of thought, it’s beneficial to go back to your trading journal if you keep one, at a time when you’re less stressed and tired. It may be that your trading was indeed poor, but even good trading that resulted in losses can feel terrible in these circumstances.  Build good habits that are not based on the outcome of a trade.

Th problems are numerous in pushing for large day, but if you can become skilled at identifying when to push, it can make a really big difference to your bottom line.


Make Your Decision Wisely

To decide on whether continuing to trade and push is the right thing to do, you must consider the points above. To work out if the conditions are good, you must not only have a firm handle on the way you monitor the markets and how they are trading, but you must also ensure you are aware of what the best conditions for your trading system are.

It could be that it would get beat up on a day when price is strongly trending or it could be that the same type of market is ideal for the strategy. You must also be able to objectively determine what your mental and emotional states are throughout the day and in particular, at the point where you make the decision of whether to quit or continue trading on the day.

You must decide how you will trade it if you do:

Will you cut down your position size?

Will you stop if you lose half your profits?

Will you trade all of the same setups as before?

All of these things have the potential to help protect you from the “I should’ve stopped” syndrome. Whatever you decide, ensure it works for you.