Traders Roundtable – The Second “P” of Trading Success is Preparation

At our recent trading virtual roundtables we discussed the eight “P’s of trading success. In this essay I want to focus on the second P, which is preparation.

 Every once in a while you hear a story about an athlete who has overprepared or overtrained for particular event. They work so hard in practice, pushing it right up until the start of the event, that they had nothing left in the tank once they got into the game or into the ring. For every one of those stories that is true, and I have no doubt that that can happen, I am willing to bet that there are 1000 athletes who fail from a lack of preparation.

Sure if you were going to make an error in preparation,  tried the overprepared rather than underprepared.

If you are a discretionary trader, then it is true that you have to have a certain amount of vitality to take on the trading day. Trading, after all, is very much like combat and you need to go in thinking and feeling your best.

So that is actually one aspect of preparation that we normally don’t think about it that is ensuring that you are physically and emotionally prepared to take on the day. You should be taking a look at your diet, sleeping patterns, morning routines prior to the market opening, plans to take rest breaks during the day so that you can recharge your batteries.

Preparation includes establishing a comfortable, calm and stable work environment. Maybe the best preparation you can take is to buy yourself the most comfortable chair you can find unless you plan on trading from a standing position.

Normally though, we think of preparation when it comes to defining a trading plan and rehearsing the decisions that have to be made based on contingency scenarios that you developed prior to the market opening. Preparation includes rehearsals and visualizations. You want to do these in conditions that as closely approximate your trading environment as you can.

With this in mind, one of the best forms of preparation is live trading with real money but at a much reduced position size so that you can duplicate the actual trading conditions in every respect except for ultimate position size.

So as you put together your preparation plan, don’t neglect yourself and your system maintenance as you put together your decision support template. Rehearse under game conditions. Remember to take care of you as well as your plan for optimal trading.

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