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Today, we discussed the various questions one should ask themselves before entering into a trade. The idea is to answer these questions with the goal in mind of properly identifying opportunities which you should gravitate towards and those which really aren’t perhaps the ones you truly want to be involved with. Accepting the potential outcomes prior to trade entry is imperative.

Focusing on the process of trading is extremely important, because it is easy to get caught up in what the potential results could be. By fully identifying your logic for entering a trade, what your risk parameters are, entry/exit points, a trader can then have a plan already set in place before the P&L starts moving around. Because once the trade is on and the market starts moving around, without a plan, you are more susceptible to making poor decisions. Markets are uncertain, we can’t control how the market moves, but there are factors which we can control.

At the end of the day, when all factors are considered you should have a ‘good feeling’, a feeling of excitement about the opportunity in front of you. This will allow you to execute and manage the trade with greater poise. A lack of conviction or failure to accept the outcome of the trade ahead of time will lend towards a greater likelihood of making mistakes after the trade is on…

---Written by Paul Robinson, Market Analyst

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