Ten Questions to ask Yourself Before Every Trade.

Ten Questions to ask Yourself Before Every Trade.

If you are just randomly trading what you like with no real underlying system, method, or planning, then unfortunately, your odds of success in the long term are slim.

It is crucial that you create for yourself a system or methodology that enables you to trade in a way that historically wins, controls risk, and does not bring your ego and your emotions into your trading in a destructive way.

Ten questions to ask yourself before every trade:

  1. How do I define my trading style: swing, momentum, breakout, trend following, reversion to the mean, or day trading?
  2. How big of a position do I want to trade? How much capital am I going to risk?
  3. What is my risk of ruin based on my capital at risk?
  4. Why am I entering the trade here?
  5. How will I exit with a profit? A price target or trailing stop?
  6. At what price will I know that I was wrong?
  7. Will I be able to admit I was wrong and exit the trade if my stop is hit, or will my ego make me hold and hope?
  8. Can I emotionally handle the loss without blaming the market?
  9. Can I really risk this money, or do I need it for upcoming bills?
  10. Am I committed to persevering in my trading regardless of the outcome of this or any other single trade?

I believe the answers to these questions will determine your success more than anything else.