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One Daily Activity That Will Improve Trading
07/10/2012 6:00 am EST
Forming a daily checklist will ensure you don’t miss important information that could be crucial to the success of a later trade.
Some of the best things you can do in trading and in life in general are the very simplest. Yet because they’re the simplest, they’re often disregarded and not valued.
People all too often are quick to look for complex solutions when they really do not need to. Ensuring that the basics are done well is the foundation which everything else should be built upon.
There was a time when I believed that people who use checklists were boring, dull, and incapable of remembering a simple set of tasks or items on a list. In hindsight, this was not an especially useful way of thinking. My market checklist is at the center of everything I do as a trader.
In trading, one of the most obvious but most important ideas is to know what is going on at any given point in the trading day, and not either being taken by surprise or "forgetting" a particular aspect of the market that may have bearing on a trading decision. A simple, well written and thorough checklist can help you to remain on top of all that’s around you. Hey, if they’re good enough for NASA, right?
Knowing which economic releases are due out, the current market mode, and important technical references are all potentially pivotal to your efficacy each time you trade. Trading too close to NFPs, or buying in an aging uptrend close to an important technical resistance level, for example, are not things which are going to help you in your never-ending quest to making it as a professional trader. However, they are not especially difficult obstacles to avoid.
A checklist is a means to ensure you do not forget anything. A checklist is a point of reference for important observations. A checklist can reveal patterns where you may have missed them. A checklist can make you much more organized and allow you to complete tasks more quickly. A checklist allows you to easily incorporate new variables into your trading. A checklist forces you to consciously address items which you might "skip" over normally.
A Broad Outline of My Checklist
You might think that it’s easy enough to remember to do this or check that each day without a list, but for me it’s when the market is going crazy that you really need the information. This is usually when the information hasn’t been checked properly. The list I use is outlined below.
As you can see, it’s not really a list as such, as each individual will look at different things depending on what their strategy is, filling out specific details as necessary.
Constructing a checklist for your own personal trading is not as simple as it might first seem. It needs to be well planned out and constructed in such a way that it flows. So think carefully and create a valuable checklist for your every day trading routine.
This article was written by the staff at Netpicks.com.
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