Top 3 questions to ask yourself before entering a trade regardless of any trading strategies

  1. Does the trade base on my trading strategy?

Many traders have the urge to enter a trade once they open the chart or after a few minutes look at it. They are hunting for trades but not waiting for the trade to happen. They often have many strategies when got questions about how they enter a trade. The risk of trading multiple strategies and undefine strategy is that once you hit a few losing trades you are unable to define the cause of it and unable to determine if you should continue to stick to the strategy.

The objective here is trying to avoid the urge of entering into a trade, overtrading, and start learning to have a habit to stick to a trading plan. This is critical because soon it will remove your emotion in trading and treat trading more like a business.

  1. Do I have an exit plan?

The next question to ask will be where is the exit point for the trade. The exit we are referring to here is the exit when your trade goes as your expectation or your cut lose when it doesn’t. It is important to know how to cut losses so that it can protect your funds in your account. The common mistake is that most traders will have one big losing trade that wipes off their account.

Managing your winning trade is equally important, which some common mistake where the trader makes is that they allow a winning trade turn to a losing trade, taking profit too early or too late.

Trade management is difficult at times because seeing your profit and loss fluctuate can be emotionally stressful. Therefore, it is important to preplan before you even enter a trade.

  1. What if you lose your money in this trade?

The last question to ask yourself is what happens if you lose your money in this trade. Your mentality has to be prepared to lose this trade. When it comes to investment you must invest only the money you can afford to lose. If you are too emotional when it comes to losing trade, it maybe a sign that you are trading the money that you cannot afford to lose. You may need to consider to stop trading or lower your lot size per trade.