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Placing Orders Promptly and Correctly

ВрI have already reviewed with you previously my suggestions, explanations, and caveats about order placement. Unless you are a very experienced trader who is already familiar with all the terminology and with the applicability of different trading orders to different types of markets and for different purposes, then I urge you to review my definitions and suggested appliВэcations. Correct order placement is absolutely crucial to successful day trading. Review order placement and make certain that you are commuВэnicating correctly with your broker. An incorrect order will be costly in many cases.

Avoid Extraneous Input. I have stressed the importance of this behavior throughout the book. The day trader is constantly being bar-raged by a plethora of extraneous inputs which can achieve virtually no useful purpose other than to distract, dissuade, confuse, or intimidate. I suggest, therefore, that you keep extraneous information to a minimum, not allowing it to impinge upon your space or to infringe upon your trading decisions. In the vast majority of cases, decisions which are affected by extraneous input will not prove profitable. With the exception of specific instances which may prove beneficial, e.g., taking advantage of news to exit or enter a position as previously discussed, extraneous input is the enemy of most day traders and should be kept to the absolute miniВэmum. Some day traders benefit from reading certain publications, paying attention to the news, or consulting the opening market indications, but I find that such information is frequently not productive and unfortunately counterproductive in many cases.

Keep a Trading Diary. Another little device which has helped me considerably over the years is my trading diary. While this may again seem an unnecessary and compulsive preoccupation, I assure you it is anything but compulsive. I have found that the maintenance of a detailed trading diary, particularly for those who are new to day trading, can be one of the most effective learning tools available to the day trader. Your diary should contain a list of all trades that were made, the reason or reasons that you entered these trades, the reason or reasons that you exited these trades, and any other comments, particularly of an emotionВэal undertone, which may have affected your trading decisions. This diary should be available for review and should in fact be reviewed at least once daily, preferably at the end of each trading session or previous to the next trading session early in the day so that you may relive both your trading errors as well as your trading successes. The review will help you learn and will therefore increase your winning behaviors while decreasing your losing behaviors. It can also help you learn a great deal about the trading systems or techniques which you are using, whether they are the ones suggested in this book or otherwise.