Home Trading Strategies TRADING: How To Tell If What You’re Doing Is Correct?

TRADING: How To Tell If What You’re Doing Is Correct?

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TRADING: How To Tell If What You’re Doing Is Correct?

hey hey what’s up my friend so in today’s episode right i want to talk about you know how do you know if what you’re doing in trading is correct because here’s the thing in trading it’s not like you know school where you get praised by your teachers it means that you’re a good student you’re doing something right and if you get scolded you get punished when you get cleaning it means you’re a bad student and you’re doing something wrong it’s not quite straightforward in trading because you can make money on wrong trading decisions like you know averaging into your losses widening your stop-loss you can make money you doing such things at the same time right you can also make the right trading decisions and lose money so you can see that in trading it’s not as clear cut right so this is why in today’s episode i want to share with you a few things to look for right so that you are certain right that you are on the right track and you are making the right trading decisions okay first and foremost number one you must have a trading plan so what is a trading plan so a trading plan is a framework right that tells you right what exactly to do where to buy when to buy how much to buy and sell whether you’re trading stocks fx futures whatsoever this is what a trading plan does for you it’s like a framework to guide your trading decisions why simple right because if you don’t have a framework if you don’t have something to fall back on to kite your trading decisions then you’ll be trading based on emotions you’ll be trading based on subjectivity you’ll be trading based on your gut feelings can you see where i’m coming from and if you are trading based on you know emotions uh gut feelings whatsoever i’m sure you can agree that your actions won’t be consistent right if you’re in a good mood you may do something different if you’re in a bad mood your trading actions might be different again so in the long run what you’re gonna get is inconsistent trading results and that’s a big step backwards okay so this is why we need a trading plan a framework to guide our actions so once you have a consistent set of actions you will then get a consistent set of results number two you must have a trading journal every time you put on a trade you will record up record it down in your trading journal you write things down like you know your trading setup the name of your trading setup uh the markets that you’re trading your entries your stop-loss your profits et cetera and the purpose of your trading journal right is it’s kind of linked to your trading plan because if you follow your trading plan then your trading journal right will be trading setups that are according to your trading plan whether you trade breakouts train continuation trade et cetera so your trading journal will be kind of linked to your trading plan it will be trades that are taken according to your trading plan and this is where things get interesting if your trading journal let’s say after 100 trades 200 trades you realize that you are making money from your trading it shows that you might have an age in the markets right you are doing something right okay but at the same time right your trading journal could also be you know costing you money in the long run this tells you that you know hey your trading plan you know it’s not working as well it should be right you know maybe your trading strategy needs refinement and tweaking and the only way right you’ll know this is if you have a trading journal if you have something right that you can look back on right to see your progress over time and that’s the power of a trading journal right it helps you improve your trading results it tells you whether are you headed in the right direction or whether whatever trading plan you that you have right needs refinement needs tweaking and its changes so this is where your trading journal comes into play that’s number two so you must journal every single uh trade that you take especially if you’re a price action trader discretionary trader uh the third thing you ignore opinions right and just simply follow your plan and that’s if you do that i applaud you because you are definitely in the right direction because oftentimes right traders on social media you know twitter facebook whatsoever they are seeking the opinions of other traders hey hey rainer what do you think of this chart man you know gold is an uptrend do i buy right now oh you know hey reyna what do you think of this xyz stock right now can i buy right now should i sell so here’s the thing right if you follow the opinion of someone else the problem with it is that you do not know what is their trading plan second thing is that you do not know when they will exit the trip because you can be pretty sure they can tell you when to buy but when they sell they won’t tell you all right so that’s why you don’t want to follow the opinion of other traders because they have different objectives different time frames different goals so this is why you want to follow your trading plan follow your rules ignore the opinion the analysis of other traders and if you really really want to follow a trader someone that you know to to give you some uh education learning curve conviction then follow someone that adopts a similar trading methodology like you like maybe price action trading or you know your trade similar market similar time frame then fair enough but if someone is a day trader and you’re a position trader it doesn’t make sense it’s a clash okay so if you really want to go down the route of you know learning from somebody else learning from the analysis make sure you’re all on the same page you’re online if not ignore opinions just follow your plan okay the next thing right number four proper risk management because here’s the thing you can have the right plan you can have the correct trading system but if you don’t have proper risk management then guess what all of them are pretty much you know useless as void so every time you put on the trade you want to make sure that even if that trade turns sour even if that trade goes against you even if that trade hits your stop-loss you want to make sure that you don’t lose more than one percent of your trading account so i know one percent is for those with you know a pretty much medium size or large size account one percent is doable but for those of you with a small account like a hundred dollars fifty dollars one percent may not make sense but still i hope you understand the concept that i’m coming from every time you put on a trade if it goes wrong you want to make sure that the damage to your account right it’s not too big right like a volcano eruption you want it to be just like an end by some something small you know there’s a slight pain right but it won’t disrupt your trading okay so risk management and the final thing right to know that whether you’re on the right track is this is that trading is boring trust me right once you become a consistently profitable trader once you know you are up to the next level you really realize that you know trading is boring right because you’re just simply following the rules like a robot there’s nothing much left to think right everything kind of becomes automatic like for example let’s say if you’re a price action trader you look for the market to be in an uptrend retrace to an area of value look for you know a bullish reversal pattern before you buy just repetitive right up trend area value entry trigger up trend area value entry trigger or if you’re a systems trader it gets even more boring right you just scan the markets for specific trading setup the the system tells you to buy or sell you just follow it put it in your broker’s platform and that’s it right you don’t even need to do any thinking because the system has done the work for you so once you reach a certain level of trading proficiency right trading gets boring all right so as a quick recap right how to know whether you know you’re trading the things that you do is correct number one you have a trading plan that’s good number two you have a trading journal fantastic number three you ignore the opinion of other traders and just focus on your plan beautiful number four you practice sound risk management and number five trading starts to get boring well done you’re on the right track so with that said i wish you good luck and good trading until next time you

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