We have mentioned several times that there is a lot more to trading than just buying and selling. We have also emphasized many times that it is very important that you analyze the charts to determine what your bias should be; long, short or even stay out. Sometimes the market is just too choppy to trade so staying on the sideline is the best you can do. We also mentioned that trading psychology plays a huge role in your trading. Without the proper mindset you are more than likely destined to fail as trader.
A good example is that if you cannot control the greed emotion than you could easily start trading with too big a position and then when you hit a losing trade not be able to cope with the loss. But we can take it even further by saying that there is more to stock market education than just learning to analyze charts and controlling your emotions.
Learning To Structure Your Trading Should Be A Big Part Of Your Stock Market Education
When you start learning about trading you are exposed to many new things you have never heard about before. These things could be money management, risk/reward, trailing stop, filters and so on. On top of all that you are also exposed to many different indicators and chart patterns. After you finally learn about them you need to put together your trading plan. You think you are almost finished with your stock market education because you have learned so much and boiled it down to the few indicators and/or chart patterns you want to use. But this could not be further from the truth. You are missing a big part and that is structuring your trading. This is split up in 2 equally important subjects, trading plan and record keeping.
By writing a detailed trading plan you are helping yourself tremendously as this trading plan will support you and give you a much needed structure in trading. It should tell you when you can trade, how much you are allowed to risk, when to take profit out of the account, how to trail your positions and so on. You need to have decided on all these things before starting trading because when do you start trading you will have plenty to deal with already. You cannot hesitate or question yourself. A trading plan will not only guide you but also provide you with the discipline to only trade the system that you have spent so long designing.
Record Keeping Will Continue To Educate You
Sadly an area many traders fail to put enough effort into is keeping a trading journal. You can learn a lot by going over you old trades. Not just the winners but also the losers. Why did you get stopped out? Why did you not get your full profit target? A good detailed journal can teach you so much so be sure you write down your thoughts about a trade and take a screen shot of the chart. Add annotations to the chart. Use the built in feature in Mac OSX to take a screen shot or use the free Jing for Windows. Evernote is great for keeping a journal with the possible of "tagging" your trades so you can easily filter and sort through the different trades you have taken.
Discipline Needed to Trade The Stock Market
Without discipline you will lose all your money trading the stock market