Bad habits creep into trading often unnoticed, until the market starts getting really inconsistent and volatile, then those bad habits suddenly become big problems. In order to break bad habits you need to totally change your trading environment. You can’t change a bad habit in the same environment. So here is what I recommend:

How to get rid of bad habits:

1. Move your trading office. If this is not possible, then move your desk or get a new one, and change the entire office space. If you are in a living room or a family room where others congregate, you must move to a quiet location—even a large closet will do.
2. Put motivational things on the walls. This is a personal preference. Some traders have quiet serene pictures. I have a panoramic view of forests and a huge pond with wild life outside my numerous office windows. It helps to have something to look at from time to time to clear the head.
3. Change your work habits. If you always studied at night during the week then change to mid-day or early morning or weekends only. This may sound impossible but where there is a will there is a way. If you get up a half hour earlier and only allow that much time for your trading, that in itself will be a discipline action for you. Many times traders like yourself just spend way to much time on trading. It can be done successfully with as little as a couple of hours on a weekend, although you modify the entries a bit for that.
4. Write down specific goals for the week, month, quarter, and year. Modify only as needed.
5. Write down your rules for trading and stick to those rules.
6. Decide what trading style you wish to do and the 2-3 strategies you will use then ignore everything else.
7. Use only 1-2 sources of commentary and news about the market. Cancel subscriptions to magazines and newspapers that clutter and influence you to experiment. Don’t experiment at all. Stick with a set plan.
8. Realize that not every day is a good entry day in the market. Realize that you won’t be in every moving stock. You goal should be to find a few great trades a month, rather than dozens of so-so to lousy trades. Most Traders trade too often.
9. Limit your time to study and search for stocks to buy. Most traders make this more work than it really should be. Work smart, rather than work hard. Working hard is digging a well by hand. Working smart is renting a backhoe.
10. Include a family member in your trading, try to show and teach them about the market. Expressing your ideas, theories, and knowledge will cement it in your mind, and it will help you clarify what areas are still confusing or lack focus and direction. The inclusion of a family member will also give you someone to bounce ideas off of and will bring a second opinion to your trading which is always a way to balance out extremes of emotions.
11. Nothing is a sure thing, not in life or in trading. Accept this fact and accept that from time to time you will make a weaker trade or choice of stocks to trade. Exit immediately and don’t regret the mistake. Mistakes are learning tools only.
12. Focus. Most traders lack the discipline to stay on a specific pre-defined style and set of rules. Commit to a style and strategy for at least 6 months before making the determination that it works or doesn’t work.
13. Communicate with me and let me know what is going on before you want to toss your trading computer out the window.
14. Make a decision and hold to it. Don’t second guess yourself each day by over analyzing your holds. Don’t move up stop losses without good reasons.
15. Accept that it takes time to change bad habits and that there will be times when you derail and slide down into bad habits. When it happens, stop trading for a week. Then restart by reviewing your rules and strategies, and moving forward from there.

Martha Stokes, C.M.T.

© Copyright 2009, all rights reserved

Member of Market Technicians Association

Author of Cycle Evolution Theory

Instructor and Co-Founder of TechniTrader.com

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