Dr. Brett Steenbarger has helped thousands of traders maximize their performance, from portfolio managers at hedge funds running billions to individual traders at proprietary trading firms. So let’s all agree that he knows what he’s talking about.
And he says that whether you are trading futures or forex, you should ask yourself three simple questions each day. “Think of the compounding effect that has over the course of a day, over the course of a year,” Dr. Steenbarger added.
Here are the three questions.
This is the third article in our month-long series on how to get better trading every day. For complete access to this series, go to https://blog.topsteptrader.com/topic/september-trading-insights.
A trading journal seems like it’s going to be an onerous process of meticulously writing down our trades, analyzing them and then coming up with an action plan to improve. Not so, said Dr. Steenbarger on our Limit Up! podcast. Instead, he said that in order to see exponential improvement, traders need to ask themselves just three questions each day.
Question 1: What’s the one thing I did best today that I want to continue tomorrow?
Repeatedly in the interview, Dr. Steenbarger said that traders don’t spend enough time complimenting themselves on what they do well. Instead, they berate themselves for what they do wrong. While critical analysis of our weaknesses is important (see question two), trading well is also about maximizing our strengths.
We’re all going to be good at some things and bad at others. If we can find a trading strategy and style that builds on our strengths, we’ll be making progress. And that’s what it’s all about.
Question 2: What’s the biggest mistake I made today that I am going to make a concrete effort to change or improve tomorrow?
Here’s where we have a chance to be self critical. But the answer to this question is tactical. It needs to get at the heart of an issue. It’s not, “I lost money.” That in and of itself does not indicate there was a mistake. Similarly, if you made money that day, perhaps you did so by making a huge trading mistake.
Did you move your stops in the heat of the trading day? Were you chasing the market? Were you fighting a clear trend? There’s no limit to the number of mistakes that we could make in a day.
Question 3: How am I going to do that?
This could require you to commit to something simple (like not moving your stop) or something complex (like a new morning routine). But following through on this is how you will improve your trading.
So, are you ready to trade better? Then commit to a daily trading journal that answers Dr. Steenbarger’s three questions. Today!