One morning, I had a scary moment when my ISP went down. I had just entered a trade and now, I was blind. Fortunately, I had my broker on speed dial and I was able to find out where I was and get out with a small profit. That started me thinking about checklists for trading. So here is mine:
- Always have your broker on speed dial, on a sticky,or written down somewhere
- Make sure that you have good oversurge protection.
- Have an alternate source of power or a power back up.
- Remember that if your power goes out, modern phones can't connect. Have a cell phone or one of the old "Princess" phones at at hand.
- I like to check my internet connection several times during the day, if I am not otherwise busy. I want to make sure that I'm connected at speed, or if there is something wrong that may force me to reboot.
- Do you back up your data? External hard drives are cheap and getting cheaper. So are DVD's so that you can keep semi-permanent back up copies.
- Keep your antivirus and spyware programs up-to-date and run scans frequently. Viruses and adware/spyware can eat into computer resources, slowing things down. At the worst, they can be malicious and really screw things up.
- I keep my trading plan readily available and check it several times, as well. This is a checklist of trade mechanics and performance. This is my game plan.
- I have a small recorder so that I can record my trade log without the distraction of having to write or type. I can always transcribe my trade log later.
- In addition to recording my trade entries and exits, I also keep a running commentary on how the trade is evolving and on my emotional state.
- I also comment on my indicators, and whether there are any contraindications to taking a trade.
- This kind of commentary helps me to see if I am getting too anxious to get into a trade. Or conversely, if I am starting to talk myself out of a trade. Hearing me talk out loud acts as a greater feedback than just thinking quietly to myself.
- All this commentary acts as another checklist before, and during a trade.
- I always want to check and see if I am developing any biases. I want to be aware if I am starting to predict a certain market move or a change in direction. The next step after prediction is to demand that the prediction be fulfilled.
- I also want to check periodically to see if I am getting bored or distracted.
- Conversely, I want to make sure that I don't get entranced by the computer. Becoming too distracted, or too intent on making something happen are sure to cause a poor trade entry or trade execution.
So there it is. A checklist of mechanical and mental items that I always want to have at hand.
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8 comments:
Dr. Hong,
You are very thorough in describing those in your articles and other articles, i can't even describe like that myself. How long does it take for you to do that? Do you make such list long time ago? or just recently when you are writing the article?
I wonder what's your Myer Briggs personality type?
Does such personality type affect with how successful / not successful as becoming a trader?
Or something else perhaps that make you such a thorough / accurate type person?
thanks
Thank you for your kind words. I don't know what my personality type is. I can't answer whether personality type makes one a good or bad trader, per se. But impulsivity and affective disorders (depressive or bipolar types) is associated with poorer decision-making. that's because the affective disorder acts as a lens, which can distort reality.
As for the lists, most of the time, I don't consciously think of them - until something happens. Then I sit down, as I did when I lost my ISP and think about what I need to do to correct that situation. At such times, I use everything that I've learned, read, or heard at such sites as Woodie's CCI Club.
Then, it's just a matter or organizing my thoughts and committing it all in writing into my trading plan.
As far as thoroughness, a physician needs to be thorough when he approaches a patient's problem Having checklists (treatment protocols) also helps. Perhaps it's because of that that I like to organize my presentations into checklists and bullet points.
Finally, I know that I did not start out my career that way. I had to be taught how to do so. So I think that you, too, can learn and train yourself to organize your thoughts and incorporate them into your trading plan.
I wanted to post this comment about your CheckList since I find your
posts generally very instructive and thought provoking.
Wouldn't a Bracket Order be what you are looking for? Then once you are filled immediately an OCA pair of closing orders representing StopLoss/Target are immediately sent to the exchange.If your Broker Order Entry/Management software doesn't support Bracket Orders then I would suggest changing broker...
Thanks Iain. I appreciate your suggestion about bracket orders. And yes, they are very important to use if you are trading futures or commodities. But if, for instance you are trading options, that may not be an option. Yes you can bracket your trade, but you don't have the option of an OCA order.
And, even if you do, sometimes there are gremlins. So it's always a good idea to MAKE SURE that there are no open positions or orders before you shut down for the day.
Hi Bruce
Thanks for the reply.
I would add that Bracket Orders available to Stocks as well as
Futures and Commodities , though I am sure you are right about
Options. (However Options that are bought as opposed to naked Options
that are written (sold) have limited liability so that's not too bad
in my opinion).
Yes I agree totally, always make sure.
Its just that I suspect very few Stock traders actually even know
about Bracket Orders (and OCA orders)!
cheers iain
Hello Dr.Hong again,
there is an article http://www.iitm.com/articles/Personality-Type-and-Trading.htm regarding Personality type.
according to the article, i am more inclined towards the P rather than the J.
And from what I can observe from your writing style so far, you are more likely to be a J
So thanks for the following up article after this to give some tips how to be more a J.
But it's pretty hard i can say...
Thanks for your feedback Anonymous. I will check out Dr Tharp,s Personality Checklist. I know that he is a reputable writer.
Anonymous: I looked into Dr Tharp's site. My difficulty with personality tests is that there are so many of them. That would suggest that no one has a real handle on the huge topic of "Personality." Also, each writer seems to have his own descriptors for differing personality types. There's no standardization, if you will. That makes the entire subject confusing. I tend to be concrete in my thinking and when presented with such variety, tend to dismiss the subject as mere speculation. But then, I'm a physician and not a psychologist.
But beyond that, I've taken such tests and I know that, depending on a variety of situational factors, my test results (and my so-called personality) changes from day-to-day. Some times I'm right-brained, sometimes left-brained and usually, even-brained. But overall, you are right. I do have a tendency to be a J personality. I congratulate you on your perspicacity.
By the way, there is a link on my site to Personality Tests and Tools, a free site that measures such things.
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