Early in 2007, I was curious (and stupid) enough to buy Ken Fisher's book The Only Three Questions that Count, which, for me, was absolutely useless. In fact, when I was done with it, the only question that counted was, "Why did you spend your time reading this book?" Complete waste of time.

But one question – just one! – which has been very helpful for me to ask lately has been this: before placing a trade, I ask myself:

Are you entering this trade with a meaningful advantage?

If you ask yourself this, and if you are honest in your reply, you will save yourself a lot of pain. I have "talked myself out of" quite a few trades lately by asking this question and replying, "no."

Some people would say this question is similar to asking if you have an edge. I suppose that's true, but I've never really liked the word "edge" in this context. It sounds too marginal. I don't want a 51% advantage. I want a 70% advantage or more. "Edge" doesn't demand the kind of high bar I'd like a trade idea to hurdle in order to pass.

When I've challenged myself with this question, I realize that there are some trades I am entering Just For The Hell Of It (ahem, AutoZone, anyone?) More frequently, I've avoided a number of goofy /ES trades when I realize that the price action is in the middle of no-man's-land, and it's anyone's guess what's going to happen next. I don't want to guess. I want probabilities in my favor.

Try asking yourself this question for the rest of the week. See if it helps.