Good trading depends on good habits

Most traders experience similar emotions. Exhilaration when a trade goes your way, disappointment or stress when it goes wrong. No matter how many times you trade, these emotions are hard wired into your psyche. Whenever a negative emotion is experienced your confidence takes a hit. When trades go your way the natural reaction is to want to trade more often. Both these experiences can induce wrong trading habits.

With a lack of confidence, it is difficult to take a trade even though all the signals are in place according to your system.. When you become over confident there is a tendency to over trade.

The solution is to always have a trading plan. If you know upfront exactly what your parameters are and what you will do when either a stop loss is hit or a profit target is reached, then the issue of emotional reaction is avoided. You simply trade your plan. On the other hand without a plan in place, it is very difficult to make the mental adjustments necessary to keep your emotions in control. 

So the first good habit to develop is to always plan your trades. Preparation is the key to good trading and the key to managing your emotions.