This applies to so many things in life and it also applies to anything you might do in trading or investing. Keep things simple.

Your mind only has a conscious capacity of about seven chunks of information. You cannot hold anything more than that in consciousness. Have someone give you a series of 10 two-digit numbers and you’ll probably find that you have trouble remembering more than five of them because of this limitation in capacity. If you attempt to do complex things with the market that require you to use more capacity than you have, then you’ll probably fail.

Now, keeping it simple doesn’t mean that you can’t use a computer to sort through the vast amount of information available about the market. On the contrary, I highly recommend it. However, it simply means that your methodology and your daily tasks do not have to be rocket science. In fact, the more you try to do, the less likely you are to succeed.

I recently did a psychological profile of a broker/trader that ranked in the bottom 1% of all investors who had taken my psychological test. He had high stress, a lot of internal conflict, poor organization, no system, a negative attitude—and probably everything else you could possibly name. I then did a 10 minutes did a ten minute consultation with him, but he really needed several days. However, the key issue for him was how overwhelmed he felt by everything that came across his desk. How could he find good stocks when there are so many stocks? How could he follow any given plan when his clients all had conflicting goals and motivations? His life was a mess.

This broker needed a lot of psychological work first. His life was in chaos because his mind was in a state of chaos. Simplify the chaos in your mind and you’ll simplify the chaos in your life. And you can start that by deciding what you want in life (such as the dream life that was suggested in a prior tip) and then focusing on only one or two simple goals from that dream life.

Secondly, he needed a simple system to track his own trading—preferably a long term system that only gave him a few signals each week and that only required that he look at the market after the close. That way his personal decisions only had to be made once each day and they could be done away from the chaos of the market. That system could be something as simple as buying on a 110 day channel breakout; use the weekly volatility as a worst case exit; trail it from the close as a profit taking stop; and don’t risk more than 1% of his equity on any trade. In his case, he needed to do a survey of all of his beliefs about himself and that market. From that survey, he could begin to design a trading method that fit him.

Third, he needed to do a mental rehearsal for the day at the beginning of each day and a daily debriefing at the end—these are two of the more important tasks in the ten tasks of trading. But they are simple.

In the mental rehearsal, you merely ask yourself some questions like “What could go wrong today that I’m not prepared for?” If you come up with some potential problems, then you need to come up with some solutions and rehearse them in your mind. It’s that simply, but when you do it your trading and your life will improve.

Similarly, at the end of the day you need to ask yourself, “Did I make any mistakes today?” A mistake, by the way, has to do with not following your rules. And if you have no rules, then everything you do is a mistake. If no mistakes were made, then simply pat yourself on the back. However, if you did make a mistake, then plan and rehearse how you will avoid that mistake in the future. Imagine the impact that correcting each mistake that you make will have on your life and trading!

These are all simple steps. Success comes from following simple steps. When you understand that and practice it, your performance will improve dramatically.