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Trader Q&A: Lee Bohl on Trading Habits

Lee Bohl discusses the importance of developing and practicing good trading habits.

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I think one habit that I've developed over the years is researching my ideas and then practicing them. It never ceases to amaze me that perfectly reasonable people will put vast amounts of money into a tip they hear from their friends or neighbors. They don't even spend the time maybe to do a little research. Also, I think this happens even if you're talking about shorter-term trades. Somebody says, 'I'm only going to be holding this trade for a couple days. I don't have to do a lot of research.' Well, what happens if that trade you were holding for a couple of days has an earnings announcement in it? You might be taking more risk than you thought. So you have to research even a short-term trade. Then if I have a new idea, what I'm going to do before I put real money into the idea is see how that idea might have worked in the past, and I'm going to go back, take a look at the charts, see, 'Yeah, it did work.' And then if I'm convinced that it did work, then the next step I'm going to take is what I call a virtual trade. I will actually do a paper trade with my new idea and see how it evolves in real time in the market. And then if that works out okay, the next thing I'm going to do then is put real money into the idea. But I'm not going to start with my full commitment size. What I'm going to do is start small, get comfortable with it, and then once I do feel comfortable with it, do my regular commitment size.

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