Critical Thinking

Often it is considered to be doubting yourself and your own thoughts when you start to question an idea or a solution you might have but I tend to disagree. 

Many atimes while going on with my trading activities, investing or implementing a new idea/method, basically everywhere, I question my own idea severally. These questions do not have answers but rather lead to more questions and those questions lead to more questions and in the end now I start finding the answers myself and put the pieces together making my initial idea more accurate & more efficient.

I'll relate this to trading. System Building. When forming your own trading system you might not know everything good that a trading system needs to have but by asking yourself questions you'll most probably figure out more than three quarters of all necessary elements of a trading system all by yourself even before doing any research. 

New traders mostly have the habit of asking someone who they consider 'a guru' about what to do in a situation. I get asked some questions sometimes and I just have to tell them "follow your trading plan" only to discover their plans don't account for such very common situations. It's pathetic honestly. 

Let's start. What should make me get into a trade? Which setup should I look for first? and if I see one, what should guide me in picking the right lot size for this trade? What percentage of my balance should be my stop loss? What percentage of my balance should be my take profit? What is the risk to reward ratio? If I get in suppose the price consolidates at my entry, what should I do? Suppose the price consolidates close to my stop loss what should I do? How long should I wait for me to call it a consolidation? What if it goes well but price reverses just before my take profit is hit? Should I close? Should I wait?  If I wait & it goes back to my entry point should I exit or still wait? If I'm taken out & price goes back into what was my entry and goes deep into profits does that mean my sl was wrongly placed? Or was it just bad timing? If someone shows me a different setup than mine, same pair but has a different point of view from mine, should I trust him? What if I trust him & fail? What if I trust him & win? Would breaking my rules be a good thing?........

There are so many questions to ask yourself. I ask(ed) myself these questions personally and ended up building a very efficient & effective trading system that accounts for different market conditions and has specifications for very many outcomes & what to do in different situations. It is not perfect but as I go and as I gain more exposure & experience I sometimes change a few things here & there to improve the system.

You can and you should follow this procedure of answering questions with questions to get a more refined bigger picture of what it is you want to do & what it is you should do under different circumstances.

Here's a video you should watch.

Thanks :) 

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