From the December/January 2013 issue of Futures Magazine • Subscribe!

5 New Year’s resolutions for traders

I will have a plan before entering a trade

Finding a promising trade is only half the battle. Before putting on any sort of position, it’s important to develop a plan for entering and exiting the trade. Having a plan in place before taking a position can help reduce the bad decisions you might make when a trade doesn’t go your way. Without a plan in place, Kinahan says it can be tempting to think, “This time is different,” but he warns, “The only thing that will be different is how much money you will lose.”

For Rodock, defined entry and exit points are a must for any trade. “Before entering a trade, market participants should develop a short plan that includes not just the entry point, but also a protective stop-loss exit and a profit goal exit,” he says. “Without predetermined exit points, it can be difficult to evaluate whether or not a trading opportunity presents an acceptable risk-to-return ratio.”

The most successful traders are the ones that know how to handle losses, Oschefski says. “The difficulty is not finding trading patterns, it’s executing them properly 100% of the time. Let your winners run and cut your losers short,” he says. “A trader is much like a professional baseball player — you can be very successful if you are right one out of three times.”

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