1. CHECK YOUR RISK

If you don’t have a pre-determined risk amount where (1R = dollars risked), you are probably not making money as a trader. You need to sit down and determine how many dollars or euros or pounds or whatever, you can realistically afford to lose per trade. Make this an amount you could potentially lose 10 to 20 times in a row and still be financially and mentally stable. I always tell traders to do a simple sleep test for risk, in which they let their ability to forget about their trades and sleep soundly determine if they’re risking a healthy amount for them, or not.  SOURCE

 

2. DETERMINE YOUR RISK/REWARD

Is the risk reward there? Meaning, is there a logical profit target available relative to nearby key chart levels that allows you to get a 2 to 1 winner or more? You need to make sure that your stop loss and profit target both make sense in the context of the surrounding market structure, to learn more about this, checkout my article I wrote a few years back on how to place stops and targets like a pro.  SOURCE

 

3. WHAT IS YOUR STATE OF MIND?

Are you in a calm, collected and overall objective state of mind before you enter this trade? Did you enter this trade for the right reasons or is it a revenge or greed-fueled trade? You will have to be honest with yourself here obviously, and you will have to act on that honesty, otherwise it’s a waste of time. Remember, you are delving into the trading world where there is no boss, no one is looking over your shoulder to keep you accountable. You must do the right thing when no one else is looking – trading is perhaps the ultimate test of one’s character!

Some other things to consider are: Did you just come off a big winning trade that may be inflating your confidence in your trading abilities to an unsafe level? Traders often lose money because they get overly confident and this causes them to take bigger / more risks in the market. Remember, you’re only as good as your last trade, so stay focused and remain in the proper trading mindset or your last trade might negatively impact your next one. SOURCE

 

4. USE STOPLOSS IN YOUR ORDERS

Stop loss orders can help keep the discipline portion of the strategy intact. Always remeber to use it and don't be tempted to shift your stop loss when your trades are running rather implement a set and forget approach