Is your opening move costing you the game?
Do you dive into your trading day, or do you cautiously dip your toes in?
The first trade of each trading day often sets the tone for the rest of the day, and can be a window into the of the type of trader you are pyschologically.
It is a unique experience, and is often distinguishable from all other trades made. In fact, for over one third of traders, it shows a clear edge in their trading.
Do you have an edge in your first trade of the day? Check now here.
You might have the first trade of the day be a weakness, like the trader above. Even though he is a winning trader, he is in fact losing a lot of money on his first trades of the day.
If this is you, you need to examine your emotions when you are about to start trading. A trader who can’t wait to jump into the markets as soon as they start to trade is more likely to be a greed-based trader, and unfortunately these trades often underperform.
If your first trade is a weakness, then make sure you trade a small size for your first trade, as you identify what you need to change to improve.
Alternatively, maybe you have a strength in your first trade of the day-it’s a good habit and makes you money.
When does this happen?
Again, look at the emotions occurring when the first trade of the day is placed. Often, traders who are apprehensive and fearful in their trading choices find it hard to make the first trade. They often spend a huge amount of time researching and getting ready; feeling prepared helps ease their mental worries.
These traders often display above average performance in their first trades.
If your first trade is a strength, then this is something you can capitalize on. Ask yourself what you are doing to prepare for this trade. Is it simply the markets, or is your level of discipline higher than at other times. Try to copy this behaviour for the rest of the day to obtain better results.
To summarise:
· Identify the emotions behind why you are trading. For your first trade of the day, are you feeling apprehensive, or greedy?
· If you have a weakness in first trade of the day, trade a small size to minimise your losses.
· If you have a strength in first trade of day, study what you are doing around that, and try replicate throughout the day.
Becoming aware of what type of trader you are, and understanding when you are strong and when you are weak will allow you to replicate the good behaviour and pause and reflect when you engage in unprofitable behaviour.
Read More:
In the first of our series about exploring your trading edges, we look at the number of products a trader trades, and how this impacts profitability.
In the second, we explored whether your most traded product is really your best.
In the third, we looked at products you don’t trade that often, and how they impact your performance.
In the fourth, we looked at how the time of day you do your trading can impact your returns.