According to Timon Rossolimos, Analyst at Blackstone Futures, one of the most difficult decisions you’ll make with trading, is actually pressing that one button to get you into your trade.
Most times a trade lines up, the trader puts in their levels and – They fail to action their trade.
This is because of factors like:
1. Unexpected news announcements,
2. Psychological market price levels
3. Gut feeling
4. Opinions from others
It’s unnecessary and external points like these that will stop you from ever taking that trade.
Next time when you’re about to take a trade, I want you to ask and answers these five questions.
Question #1: What markets am I looking to trade?
First is going through your watch list.
You’ll need to carefully search through the list of markets that you’ll be potentially taking a trade.
Whether they’re in the Forex, stock, index or even commodity market – make sure you know what markets work best with your trading strategy.
Question #2: Has a trade lined up?
Next, you’ll need to know if a trade has lined up according to your proven and tested trading strategy.
Whether your trading system is a swing, indicator, mean reversion, Gartley, moving average, volume or a price action system, you’ll need to know when a trade has lined up and whether it’s ready for the go.
Question 3: Have I calculated my trading levels?
Once a trade has lined up, you’ll need to calculate exactly where to enter, place your stop loss and take profit levels.
This way you’ll have a systematic approach with every trading position you take.
Question 4: Do I know how much I can lose and gain with this trade?
Next is position sizing – Trading is one big risk to reward game.
You’ll need to choose an exact percentage of your portfolio that you’re willing to risk to gain with each trade.
With high probability trades, I never risk more than 2% of my portfolio. With medium probability trades, I drop that risk to 1% of my portfolio per trade.
Question 5: Is everything in order to press the button?
Finally you’ll need that final push to get you into the trade.
This is where you’ll check your trading setup, price levels and position size.
Once all is ready, you just need to do just one more thing.
Push that BUY or SELL button.
Those are the only questions you’ll ever need to enter a trade.
No more opinions from others, no more umming or arring and no more excuses.
Write these questions down, laminate them and be sure to follow them each time, and you’ll never second guess yourself again.
“Wisdom yields Wealth”
Analyst, Blackstone Futures