Trade Futures: Begin With An End In Mind

Those who are successful day traders understand that 90% of trading is psychological; the other 10% is what you know about the markets and your strategy. It is interesting that many who try learning to day trade end up losing because they focus too much on the markets and not enough on themselves. Although there are many psychological keys a day trader must learn, today I’m going to focus on the importance of beginning with an end in mind. 

I took the phrase “begin with an end in mind” from Steven Covey’s bestseller Seven Habits of Highly Successful People because I think it fits this particular principle in day trading so well. Beginning with an end in mind simply means that you first plan your trades, and then when the time comes, you trade your plan. 

The market moves spontaneously, and sometimes very quickly. Each tick can become an emotional strain between greed and fear. Balancing the natural emotions of greed and fear is much more difficult when real money is on the line. So, by planning your trades before you execute them, you are taking a large portion of the emotional strain out of the equation, which allows you to keep an objective focus. You should already know what signals you will use to enter a trade, what price you will enter at, what your profit target is, and if the trade goes against you, what your stop loss is. A detailed plan for each trade lets traders internally accepting the risk and set the grounds for how you are going to act. That way the trader doesn’t have to figure it out during the trade. 

The market will always do its utmost to throw you off track. Once in a trade, it is a lot like riding a wild horse. The prices will thrash around shaking off all the emotionally scared, leaving only those with the discipline to follow a plan to fully benefit from the trade. 

Planning a trade should be no different than planning for the unexpected on a trip. When you know what you are going to do when your trade runs your way, turns sideways, or goes against you, you can act accordingly with a focused mind leaving emotion on the table. To win in the market, you must learn to trade without reacting to emotion. The only way to do this is to plan your trade, then trade your plan.