Are you the kind of person who enjoys ticking off boxes? If your answer is yes, then you’d probably fit in well in the trading world.
A personal trading checklist is a list that contains a summed up version of your trading strategy. Contrary to popular belief, trading is less about learning how to manipulate the market (which rarely ever works, by the way) and more about ticking off a list of all the necessary skills you need in order to become a successful trader.
What’s a personal trading checklist?
As mentioned above, a personal trading checklist is a checklist that you can use to see if you’re ready to make a trade. You can also use this checklist to determine if you’ve already complied with the necessary guidelines that all traders should abide by.
Although making a trading checklist is highly encouraged in the trading world, keep in mind that no trader other than yourself can make your trading checklist for you. No two traders are exactly alike, whether in terms of personality or trading strategy.
Here on Binomo, our goal is simply to help guide you in creating your own trading checklist. The contents, however, are based on your own individual trading method and strategy.
Why should you have a personalized trading checklist?
Many people who get into trading understand the basics, at the very least. We know that trading involves buying and selling. We know that it also involves some kind of risk. We know that by not knowing things, we’re just opening ourselves up to possible failure.
However, what a lot of investors don’t know is that the risks that have to do with trading aren’t just associated with external factors, but also with internal ones. External factors refer to things like market movement or stock-related news. Meanwhile, internal factors refer to things like your state of mind while trading, your personal decisions, and your personal circumstances.
For example, if you’re too stressed or worried while trading, you could experience a lot of distractions that could hinder you from making good trades. Many times, things like this matter just as much as the external factors. And this is why it’s important to have a personalized trading checklist to guide you no matter what internal or external factors you may face.
1. Helps you maintain your peace of mind
Have you tried working while you’re sick? When a family of yours just got into an accident? Or when you’re facing homelessness in the next few days?
When you’ve got a lot of things to worry about, your mind is distracted. You can’t think straight, so you end up committing a lot of mistakes. Trading is the same. If you’re anxious about too many things while trading, you’re more likely to make bad decisions. In fact, the chances of you making emotional trades are much higher when you don’t have peace of mind. And as you know from our Four Types of Traders on Binomo article, emotional traders tend to be some of the worst kinds of traders out there.
When you do have peace of mind, however, you are calm, cool, collected. You don’t have any worries bogging you down which means you can focus on whatever you’re doing at the moment. This is the exact state of mind that traders should have if they want to be successful in trading.
A personalized trading checklist can help you achieve that much-needed peace of mind. Every time you feel your mind drifting off to someplace, that trading checklist will pull you right back in. It will help you stay on course, stick to your trading method, and make trades logically – without using too much unnecessary emotion.
2. Makes you trade more effectively
How do you plan your trades? Do you even have a plan? Or do you just trade whatever you feel like trading at any given time?
If you really want to make money through trading, you should always have a trading strategy or at least some kind of trading technique. Luck is not enough to complete successful trades. Many traders have tried and failed to make a significant amount of money on trading simply because they didn’t take enough time to hone their trading techniques.
Guess what? A personalized trading checklist involves having a personalized technique. It will measure your psychological sturdiness and stretch you to your limits. With a functioning trading approach, you’ll have plenty more opportunities to earn money than by simply following current trading fads.
Binomo Demo Personal Trading Checklist:
Personal Trading Checklist: Factors To Consider
1. Market Trends
One of the first things that you need to consider when making your personal trading checklist is the current market condition. What is the situation right now? Is the market in an uptrend, or a downtrend? Will you go with it or against it? How are you planning to tackle the market’s current situation?
If you’re still a beginner in trading, we recommend that you don’t ever try trading against the market. Even for those with plenty of experience, it’s not easy to do, so don’t make things harder for you. By going with the current market trend, you’ll have more chances of making a profit. You’ll also have plenty of trade entry points.
A must-have in your checklist: “Trade in the direction of the trend.”
2. Trade Investment Money
The second factor to consider is how much money is actually in your investment account.
After all, not all of us have the same capacity for investing. Some people can invest only a few hundred, others thousands. Some can invest way more than that. This is why it’s important to add this factor to your personalized trading checklist.
Knowing how much you have from the start and how much you’re planning to earn will help you stay grounded in your plans and keep your eyes on the prize.
Add this to your checklist: “Trade only with the right amount.”
3. Trading News and Announcements
Are you staying updated on current news and trends? If you’re the kind of person who couldn’t care less about what’s happening around the world, then trading isn’t for you.
Why? That’s because markets are often heavily affected by current issues and affairs. Now, if you’re not keeping up with the news, how will you know that in time to save your investments, just in case?
Simply put, if you want to make it in the trading world, you must have a reliable source of news and announcements, especially if they have something to do with trading. Repeat after me: “Always check relevant news and announcements.”
4. Your Personal State
Just like what I already mentioned above, your personal state – that is, your mental, physical, and emotional state – also matters greatly when you’re trading.
Not only do you need to be in good physical shape, but you should also always have the right mindset when you’re trading. Simply put, if you’re always sick, always going through heartbreaks, or always too distracted with all the things you need to do, you’re more likely to make mistakes while trading.
A good addition to your checklist would be: “Make sure to stay healthy physically and mentally.”
5. Risk-Reward Ratio
The term ‘risk-reward ratio’ refers to the measure of your expected profit for every dollar that you invest in a trade. For example, if you have a ratio of 1:6, that means that for every dollar you risk, your possible earnings, aka rewards, is six dollars.
The thing is, everyone’s risk-reward ratio is different, so your first goal would be to determine what yours would be. After establishing it, you should now have a clear idea of when to continue trading and when to stop trading. It’s very similar to the idea of ‘cut-loss’, wherein you cut your losses before they reach a point that’s already too much for you.
Now you know: “Check if the trade’s risk-reward ratio is favorable.”
As you can see, creating your very own personal trading checklist may not be that easy in the beginning, but the sooner you finish it, the sooner you’ll reap the benefits. In fact, a personal trading checklist could very well mean the difference between making a profit and suffering from a loss. If you want to learn more about avoiding losses on Binomo, here’s an article about Why 90% of Traders Fail.
Good luck on your trading journey with Binomo!
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