Link: Checklists

Nov 27, 2007: 2:29 AM CST

Dr. Bruce Hong at the TraderPsychology Blogspot recently called my attention to a few of his excellent posts and I wanted to highlight some of them.

Make sure you read his post entitled “Checklists” which not only is an excellent list, but addresses a topic rarely covered in the jubilant financial or trading media: redundancy of services/access.

For Dr. Hong and many other traders, he had just entered a trade and his ISP (service provider) went down temporarily. It doesn’t have to be the ISP… it could be the software you’re using, access to the exchange on which you are trading, telephone/internet lines, power outage, or any number of unforseen events.

I remember a story by Linda Raschke at her home office when she was placing trades and all the sudden she was unable to access the outside world through the internet. She checked everything and then found out that her neighbor was improving his yard and a digger had uprooted Linda’s underground cables in the process! Talk about unforseen consequences!

Either way, the price you pay for redundancy (back-ups, dual-methods for accessing your broker/software, dual computers, battery back-ups, etc) will pay off in the rare event you need it. Think of it as insurance, if nothing else.  If you aspire to become a professional, full-time at home retail trader, the question will become when will you need back-ups, not if you will need them.

Dr. Hong not only addresses the topic of access redundancy (back-ups), but continues his thoughts into other areas, such as guarding against trading biases, commenting on indicators, writing plans down, etc.

Use his checklist as a guideline to developing your own structured routine, which should include some aspect of ‘worst-case scenario’ planning.

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