Optimise Your Trading Decisions

Our job as traders is to make the best decisions we possibly can. In the heat of the moment when the market is moving quickly, we need to decide.

Long, short, or no trade…?

It’s a simple decision but one with big consequences and a huge array of variables. Not to mention the influence our emotions play on the decision… One way to improve our in-the-moment decisions is to remove how many decisions we need to make.

Compare these two decisions:

#1

• The market is trading at 15,000 that’s an interesting level. Should I go long for a bounce or short a break?
• What data is coming up?
• What’s the daily chart looking like?
• Where would I put my stop on this?
• Should I scale in first?
• This candle looks weak, should I wait for it to close first?

#2

• Should I buy it here or not?

Number two is obviously a much easier decision to make. You can put ALL of your focus and energy into making that decision as best as you can.

“But Mark! All those other decisions need to be made! You can’t just ignore them”

Quite right… But what you can do is make nearly all of those decisions BEFORE the crucial one. You can eliminate a lot of the cognitive load and free yourself to make the best possible decision.

Let’s dissect:

Should I go long or short?

Make life easy for yourself. Decide on a direction bias and then chose whether to take the trade or not. Flip-flopping back and forth between long and short is a recipe for disaster. Long or not, simple.

What data is coming up?

Pre-market prep 101, know your headline risk for the day and if there’s any highly anticipated data coming up soon that could influence the day type today. (eg The day before FOMC is often range bound).