Breaking Your Bad Trading Habits


One of the most common bad habits we find here at Warrior Trading is the forcing of trades. A frequent bad trading habit of new traders is when one attempts to get in front of what they believe to be an impending move, failing to wait for required confirmation of the specific pattern they were attempting to trade. This is an easily corrected habit albeit does require great focus and discipline.


Combating Bad Trading Habits

There are a number of ways one can utilize to combat any bad trading habits but there are 3 in particular that constantly prove their worth time and time again, all of which maintain a common theme of taking your time away from the trading desk.

These strategies include the following:

  1. Detailed record keeping
  2. Acknowledging and studying your strong point, or, your “go-to Setup”
  3. Speak amongst other traders who are both better and more skilled so you can understand their mentality and thought processes that have brought them success in the markets.

These 3 key points allow a trader to take a step back and evaluate their trading from a different perspective which can be a very powerful tool, often leading to breakthroughs in one’s own trading.


Pitfalls Of Forcing Trades

Let’s talk a bit about what occurs during a situation where a forced trade takes place. Emotional control is vital to avoiding the subsequent sequence of pitfalls of forcing trades.

  1. Something takes place where the trader will place blame on themselves, or personalizing, after a bad trade is taken, an opportunity is missed, or stopped prematurely only for the stock to continue to do what you were anticipating. This often shifts the trader’s focus from the technical side of the market to their P&L. This is where the emotionally fueled decisions begin to come into play.
  2. Next, the psychological shift causes a trader to make decisions that are not market focused but rather out of revenge or spite for what had just occurred previously. This reactive behavior is the complete opposite of what makes the great traders successful, patience. You must maintain your patience and be careful to not let frustration or fear steer you down the wrong path.
  3. Finally, after falling victim to an emotionally fueled decision as discussed in #2 ( which we all have and will happen again) a trader tends to make trades that are clearly thoughtless and irrational which only ends in further loss or even a completely missed opportunity because we were too busy trying to manage our predicament.


Final Thought

The important takeaway here is to understand what takes place so we can avoid these dreadful situations as all costs so they are not to have an effect on future trades. For example, when I start to have an overwhelming feeling about my P&L, regardless of green or red, I know that my focus is being compromised and I need to take a step back or even a short break before returning to the desk. Remove yourself from the situation, recognize the issue at hand and return refreshed prior to making another trade. Having the ability to detect specific emotions and then having a plan to remedy will allow you be much more productive in navigating the markets.