The first step to putting bad trading habits in Singapore behind you is understanding what they are. We all have our ideas of what constitutes “bad”, but here are some common examples:
- Being too conservative with your trading
- Not having a game plan before placing trades
- Moving too slowly when entering and exiting positions
- Using the wrong tools for the job (e.g., not using stop-losses), etc.
Once you have a clear picture of what you’re doing wrong, you can start working toward changing your behavior. In the words of one trader who has successfully turned his trading habits around: “You can’t change bad to good if you don’t know what ‘good’ looks like.” The first step to turning bad trading habits around is coming up with a clear idea of what you should be doing instead.
Whenever your trades go against you, that’s called a drawdown. It’s essential to pay attention to these because they give powerful clues about where your mistakes lie. For example, perhaps every time the market moves against you by more than 1%, you lose money, which means that you’re too conservative with your trading.
Or maybe out of every four trades, you only manage to make money on one of them, and you always lose a disproportionate amount of capital on the other 3. That means you might be placing trades without a clear idea of your entry and exit points, not using stop-losses properly, etc.
It would help write down as much information about each lousy trade. How much did you lose? How long was the trade open? What were your thoughts when you placed the trade? Why do you think it didn’t work out? When/where/why did you get out of the position? And any other relevant information. If you can get into the habit of keeping detailed records like that, it will be much easier to spot patterns in your trading and identify where that behavior is coming from.
Another benefit of doing this analysis is that it helps you develop your approach to trading without blindly following someone else’s. For example, perhaps you notice that you tend to get depressed (or angry) after each drawdown and make rash decisions that hurt your performance even more – it could be a sign of a lack of discipline.
Or maybe after every trade where you lose money, you get frustrated with yourself and start overtrading again, indicating poor discipline. The idea here is not just to stop making lousy trading habits in Singapore but also to become a better trader.
Perhaps you’re not too conservative with your trading, and you trade in an obvious way that leaves you vulnerable to swings where the market goes against your position. For example, if you always place a stop-loss five pips away from your entry point on every trade, the market will find it pretty easy to move beyond that exit point and make life difficult for you!
Generally speaking, the more unpredictable your behavior is, the harder it will be for traders to take advantage of your mistakes, even if it’s still wrong. Of course, this also means that being unpredictable can hurt your performance, but it beats losing money.
Based on your trading journal, know what you’re doing wrong and understand how you should be doing it instead. Develop a game plan for making the necessary changes. Trading is not easy, and every one of us has room for improvement. But by working towards identifying our bad habits, we take one step closer to becoming better traders. And when that happens, everybody wins. New traders should use an experienced and reputable online broker from Saxo Bank before starting their investment journey. For more information on Saxo brokers, navigate here.