As another new month begins, what better time to look back, check-in, and reassess our goals? Getting caught up in the day-to-day ups and downs of trading is easy. We get excited when things are going well and get down on ourselves when things take a downturn.
However, as we know, trading consistency is probably one of the most important aspects of any trading and investing strategy. The problem is that it’s impossible to be consistent if we don’t make an effort to track our actions and reassess our goals regularly.
Let’s face it, when we have a winning trade, we are more caught up in the excitement of the gain than focused on looking at what we did right and what we did wrong. It’s easy to assume that we are being disciplined and following a plan when everything keeps working in our favor. But, as the old saying goes, even the blind squirrel finds a nut from time to time! Lady luck shines a light on everyone now and then, and it can be foolhardy to assume that every success we have is purely due to our own skill set and actions.
On the flip side, when things are not going as planned, we often recklessly dive into trades and click buttons without thought, purely out of frustration and desire to get revenge for our losses. For this reason, too many people assume that trading is more of active participation than a passive one. As we know, trading more and with a higher frequency rarely leads to better results. Waiting for quality setups outside of Fair Value, with solid structure and location, tend always to be the better opportunities.
Trading Consistency: A Thought Out Approach
Consider the work that will lead to trading consistency: screenshots and journaling of your trade setups and keeping track of your actions on a regular basis. Much like filming a Hollywood blockbuster, the audience only sees the final production when watching on the big screen. However, the work behind the scenes and off-camera allowed the magic to happen during the whole filming process.
The same dynamic should be appreciated when considering our work away from the screen in preparation for our work when trading the markets themselves. Our work behind the scenes and away from the screen will help improve our trading consistency.
Abraham Lincoln comes to mind here (although there is some debate over whether he did or didn’t say it): “give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
5 Powerful Items To Aid Trading Consistency
With all of this in mind, here are our Top 5 suggestions to help keep you on track for trading consistency. Remember, we are not encouraging a complete overhaul of your trade plan. Instead, this is a suggestion to ensure you’re sticking to your trade plan. This month, consider doing the following:
- Record the times of the day or even the times of the week when you had most of your successful trades. Also, consider at what time of day you had your worst losing streaks. It’s easy to get chopped up in the trading open as a day trader. Finding quality swing trades can also be challenging towards the end of the trading week. Make a note of this and see what you can learn.
- Consider your emotional state. Being in a good mood or bad mood can have a significant impact on your trade results. For example, did you have a sense of needing to prove something that morning you got reckless? Maybe you were feeling nervous about executing your trade plan because of coming off of a losing streak? Always make sure you are in a good mental headspace before getting to the screen, and record your mood ahead of time so you can look back.
- It may be simple but get in the habit of taking screenshots of your trade setups before and after. It’s amazing what we see and what we don’t see in the heat of battle. How many times have we gone through the “coulda woulda shoulda?” A simple screenshot can help us to see clearer after the event and help us take that clarity to the next event.
- Record how you managed your stop loss during the trade. Simple as it sounds, this is vital. By recording how you managed your protective stop order, you will see if you trailed your trade too aggressively or went to breakeven prematurely and cost yourself a monster-winning trade. Micromanaging a trade has been the kiss of death for many a trader.
- Finally, you should also get into the habit of recording your targets. Much like the previous suggestion, recording where you took your final profit and if the market went much further beyond that target will be an important piece of information for the future. Maybe you are being too conservative with your target, or perhaps you’re being too hopeful. By taking note of this data, you will soon discover how good your analysis is and how that will affect your probability of success.
Trading Consistency: Looking Back Can Take Us Forward
In closing, always remember that our trading consistency – the actions we take – directly impact our final results. It can often feel like taking a step back is moving in the wrong direction. However, looking backward can help us to improve our trading consistency. Change up your mindset and look at taking a few steps back as building a springboard for a giant leap forward. If adding in extra work seems daunting, check out our article on beating procrastination. We hope this was of help.