As part of our continuing education on best practices for traders, we explore a few common mistakes experienced by traders in our field. These mistakes are what separate the amateurs from the professionals and we aim to help you identify them so you can rid yourself of them for good. If you’re new to trading, you may be asking yourself, “What habits are considered good or bad?” Below, we will touch on 3 specific bad habits and how you can turn them around to your own advantage. BAD HABIT: You enter a trade, only to second guess or change positions while the trade is happening. GOOD HABIT: This is commonly seen when trades aren’t going the way you thought they were and can lead to an even greater loss by changing positions. Know what price levels you are trying to hit for entry and exit before you enter a trade. Build a trade management plan and stick to it when entering the trade. This should include a stop loss that aligns with your total loss numbers for the day. The market moves quickly and by trying to change during a trade, you open yourself up for a lot more risk. Trust your system and don’t worry about the potential of “missing out” on something big. Better for a small win than to lose your shirt trying for a bigger gain. BAD HABIT: You are trading beyond your means. GOOD HABIT: By this, I mean that you are trading beyond what you can afford to lose and still maintain your current lifestyle. You don’t want to end up in the poor house and lose your loved ones simply because you take on more than you can chew. First, make a trading plan for yourself with goals for profit and loss for the day. During your daily trading session, if you reach those numbers, STOP TRADING. I mean this in both good and bad scenarios. It can be tempting to keep going, especially if you are deep in the hole or having an amazing day. However, the markets are fickle and can change on you in an instant. If you get greedy or desperate, then you open yourself up to emotional trading. This departure from a rules-based approach makes you vulnerable and likely to make more mistakes in recognizing patterns. When we trade emotionally, we can get caught up in wishful thinking or see patterns where there are none. This is not to say that traders don’t have emotions, but that professionals learn how to control them and tamp down those illogical impulses. BAD HABIT: You are taking on too much risk in your trades. GOOD HABIT: Understand that all trading is risky. But, we try to minimize our risk by only taking trades that fit into our trading plan. Whether you trade half-size or full-size orders, you should have some rules in place before entering a trade. At NeuroStreet we use a variety of indicators to point out areas of interest (an area for a successful trade) to carefully plot our trades. We then have rules in place to determine if the trade is “viable” or not. This is something that should be determined by the individual and in place before the trade starts rolling. For example, your rule could be “I will only trade if I see 3 or more indicators line up for a trade.” Then, you only trade if you see 3 or more indicators line up. You may end up not trading anything that day, but it is better than taking a trade you are not comfortable with. Wait for the clean setup and remember not every day is a winning day. In conclusion, I hope you were able to draw some helpful advice from this article. Keep in mind that any bad habit is going to take some time to change, so don’t be discouraged if you fall back into the old ways every once in a while. Keep pushing forward and, in time, you’ll see how something as simple as planning ahead can turn around your trading.