A Trader's Ability to Self-Evaluate

As a trader, it's important to be able to evaluate yourself on a daily basis. We all know that trading while you're emotionally compromised (frustrated, angry, sad, impatient, etc.) can lead to substantial trading losses.

The first step to overcoming your emotions is to get in the habit of evaluating your emotional status every day. I usually wake up at 5:00 A.M. and get into the office by 6:00. If I'm frustrated by a losing trade from yesterday, I make note of it and am extra careful that I guard against impatience. My natural tendency is to try and "make the money back" and that can lead to hastily putting on a trade. If during the day something causes me to get angry, then I simply stop trading. I can't be objective if I'm not calm. 

Remember, it's not good enough to evaluate yourself only when you feel like it. Trading is all about building good habits. I also evaluate my physical condition. Am I tired? Hyper? Is my mind clear or foggy? If I'm tired, I may not be as careful to make sure that all of my criteria are met before I pull the trigger on a trade. If I've just chugged an extra large coffee, I'm more likely to triple check market conditions and my criteria for taking a trade; but I'm more likely to overlook a crucial detail. 

For me, the most important part of my self evaluation process is for me to write things down. Just like jotting down notes about your trades - it's a good habit to get into. If you're too lazy to do either, then you probably aren't cut out to be a trader. Trading well on a consistent basis requires hard work and discipline.


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