- Risk Management: Stop loss, profit target, Risk / Reward, and position sizing.
- Trading Game Plan: expectations for the next session, Levels of Interest, and intraday tape reading.
- Psychological Health: Staying positive and keeping your head.
Notice the three green segments in the middle of the circle (that, as I was told today by a friend of mine, looks like the Google Chrome icon). These three segments are isolated to remind you how crucial it is to have ALL of those pieces full of their green color while you’re trading – if one of them is missing, the other two will have to compensate for its absence. If we took the above example, we would notice that the psychological health was damaged right away, as the trader immediately went into denial about the initial failure of his position. The trader then got pissed off, and risked more money in order to compensate for his initial loss, damaging both his trading game plan and his risk management. The center circle is now empty for this particular trader, and he has become a loose cannon.