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A simple Top 5 Trading/Investing checklist

1. Do your homework

Do all the necessary analysis required for the trade. The main objective is to have lesser number of factors to catch you by surprise. So, if you don't know what to look for, read or try to analyze everything related. When prepared and in case an event pops up, there is good likelihood you would have considered it in your scenarios.

A word of advice - don't read too much. Too much analysis can paralyze.


2. Why? - Have a good reason

When you have analyzed a situation thoroughly you will have good solid reasons to base your trade/investments. A foundation to base your commitments on. It is very important to have objective reasons, than taking decision based on gut-feel or some advice. The analysis will gives you good understanding of the merit of the trades/investments.

Understanding the investment/trade to the maximum extent possible prepares you for the risk and uncertainties of investment. Off the shelf advice does not help you when the things go wrong.


3. Stick to plans

When you have decided on a particular trade/investment, that is based on solid analysis and substantiate by valid reasons- plan the moves. And once the moves are planned, stick to the plan. Stick to the plan. There is no Plan B, unless it is part of plan A. Changing trajectories mid-flight is sure course for disaster.


4. Know where to enter

All trades/investments are different from each other. Each asset class, each industry, each method of trading is different. The DNA for success in each of these are unique. Unless you understand the necessities for the class - do not trade. It is preferable to watch the action for sometime before trying a hand.


5. Relax

To be relaxed is perhaps the most important. If you are not relaxed or feel confident after the analysis; with solid reasons, with your expertise in the class - then don't take it.

In other words, if you are not relaxed in taking the trade/investment then perhaps the preparation is not complete or you might have missed something that is nagging you and hence there is no comfort level. The best trades are made when you are the most relaxed - no fear, no greed, just strategy.


Happy Trading


:) Falkor

Part of Problogger's Top 5 group writing project
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