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4 Things You Can Do Now to Improve as a Trader
By Brett Steenbarger | TradingMarkets.com | November 17, 2006
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1) Diversify: If you have a pattern you trade successfully, you don't have to grow your size. Instead, look to diversify to a different pattern (different market, different time frame) not correlated with the first. You'll smooth out your returns, as one pattern makes money while the other experiences drawdown. You'll also achieve the portfolio manager's goal of superior return for less risk exposure.

2) Review Entries: Review your trades for the week and see how much heat you took on your winners. This will give you an idea of how good your entries are.

3) Review Exits: Review your trades for the week and see if the market went in your favor or against you after you exited. This will give you an idea of how good your exits are.

4) Work Orders: Get into the habit of working orders to buy at bid, sell at offer or to place orders between the bid and offer to avoid paying a price that is out of line with "fair value". For the frequent trader, the single tick saved by good execution adds up over time.

The successful traders I've worked with never stop working on themselves. This is equally true of successful athletes, musicians, and chess champions. Small, steady improvements can create massively greater performance over time.

Brett N. Steenbarger, Ph.D. is Associate Clinical Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY and author of The Psychology of Trading (Wiley, 2003). As Director of Trader Development for Kingstree Trading, LLC in Chicago, he has mentored numerous professional traders and coordinated a training program for traders. An active trader of the stock indexes, Brett utilizes statistically-based pattern recognition for intraday trading. Brett does not offer commercial services to traders, but maintains an archive of articles and a trading blog at www.brettsteenbarger.com and a blog of market analytics at www.traderfeed.blogspot.com. His book, Enhancing Trader Performance, was recently released for publication (Wiley).


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