General:

It was suggested that for today’s blog I throw out a piece of trade advice and one straightforward yet essential one quickly came to mind: make sure the trade you want to place is the trade you’re about to place. Trade errors often occur when you intend to place an order you’ve placed time and time again only to realize this time you missed something.

You wanted to buy and instead you sold; you wanted to place a stop order and instead you placed a limit order – and got filled; you wanted to buy a spread – options or futures – and instead you sold – and now you’ve erred twice.

If they’re orders you’ve placed time and time again there’s typically a sense of self-assurance that this time is no different than your past successfully placed orders. It’s habitual; it’s almost automatic. Don’t let that reasoning creep into your trading. Instead – for every order – engage a small amount of time and brain power to review what you’re about to do.

The basics include: are you trading the right month? How soon are the dates on the calendar when you need to be out of the contract. For day traders, are you entering the market or exiting? Are you adding to your position or reducing it? Do you have other orders from a prior trade that need cancelling? Should the order be a day order or a good-‘til-cancelled?

Often orders placed in error are recognized quickly and can be corrected quickly with little or no fallout, but it’s a far better trader who is engaged with their trading at the order entry. It’s at this point – for every order – when you can review and evaluate your order for accuracy.