A Hunch or a hunchback?

New traders will often get these hunches, these gut feelings, these irresistible and emotional charges pushing them to trade a certain way.

This can be a great thing to happen to you, it means that as a new trader, you’ve been hooked and you are passionate about trading, but be wary of the risks of emotional trading.

If you find yourself pushing that BUY button in pursuit of the great trade without validating them first, you might be turning into a tradoholic.

So in order to follow your gut without risking breaking the bank, make sure you follow these simple steps:

1: Match against your plan.

If there is a correlation between your potential trade and your trading plan or system you may be onto something, but if it is completely disconnected, then your hunch might be off.

2: Keep it within comfort.

No matter how sure you are of this trade, there is always a possibility that it may go wrong. How much money are you comfortably willing to lose if the trade went sideways? Trade within your limits of what you would be ok with if you lost.

Check on a clean slate.

You may have been looking at the same chart for days, you are starting to see things that are not there or perhaps you have too many lines making things messy. Before you hit that buy button, open up a clean, new chart and redo your plan for this trade.

4: Don’t forget to set your stop loss or take profit.

I know, I know, you have a good feeling about this one, you are sure it’ll go through the roof. Stop. Right. There. No good feeling is worth getting overconfident and losing a load of money over. Make sure you put your SL/TP orders and whatever you do, do not move them mid-trade.

Now go ahead and follow the pot of gold next time you get a hunch.