Trading is one of the most challenging and rewarding things you can do. However, if you are doing one of these five things, you need to stop trading and reevaluate whether or not you should be in the markets.
Number One: Do you catch yourself guessing?
By guessing, I mean are you making decisions without a reliable systematic approach to the markets. A system is something that is repeatable, reliable, and scalable. If you’re getting into a position because of a gut feeling or because you read an article online, or you just think that it’s going to go up, then you’re guessing.
Every single trade that you place needs to come from a systematic approach so that you can tell whether or not you should stay in a position or you should get out. Most importantly, the name of the game with trading is repeating your successes and not repeating your failures. If you’re just guessing, then you have no idea why you were successful or why you were not.
Number Two: Are you treating trading like a hobby?
Trading is a matter of gain and loss. Gain and loss of your hard-earned savings. Business is serious, purpose-driven, and all about profit. Hobbies are for thrills, fun, and passing time, the opposite of a business. If trading is just something you’re doing to pass time or for the thrill of a winning trade, then you probably shouldn’t be doing. The other guys who are out there are purposively investing millions of dollars in software and education every single day and are going to eat you up for breakfast.
Number Three: Do your emotions call the shots?
Being emotional is not a bad thing. In fact, it can be a very good thing when it comes to trading. Getting really excited for a winning trade and getting really upset when you lose is all part of trading. So long as that you don’t let it affect how you make a decision. That’s huge. If you are letting your emotions control whether or not you’re getting in or out of a trade, then you’re breaking rule number one, which is don’t guess. That means that you’re not using a systematic approach and if you’re not using your approach to get in or out of your trades, you’re letting your emotions. Emotion-based decisions are unrepeatable.
Number Four: Are you trading on casual recommendations?
If you are taking trades because your friend who sounds really, really smart talks about this IPO and how you should get involved and you don’t do much research and you just take their casual recommendation to heart, you’re going to get burned, it’s just a matter of time. You need to research, you need to be committed, and you need to be ready for the worst and best case scenarios. If you’re not, then you’re doomed to fail.
Number Five: Last but certainly not least, is that you should stop trading if you’re not enjoying it.
Nothing in this life is worth doing if you’re not enjoying it and frankly life is just too short. Trading is incredibly difficult and not fun at times. That difficulty has to be a part of why you trade in the first place. I know from experience that there’s nothing worse than losing money except for when you lose money and you don’t know why. If you’ve lost the why of why you’re trading, then you shouldn’t be trading at all.
I hope this helps some of you out there who may be contemplating whether or not trading is for you and if you’re doing any one of these five things, please stop and reevaluate whether or not you should be a trader.
