Whether you’re new to trading or a long term student of the market there a number of things you will learn along your journey to profitability. Trading can seem effortless when you’re on a winning streak and almost impossible after taking several losers in a row. If you are struggling to break into the realms of consistency then you must get to the bottom of what is holding you back and break the habit.
Over the years we at Traders Edge have observed a number of things that could be holding you back. We’d like to share them with you now and help you to get back on the right track.
Abandoning your strategy
New trading strategies flood the market all the time, they generally promise riches in super quick time and appeal to our desires for wealth with minimal effort. This can be all too tempting when you’re experiencing multiple loses with your current strategy, assuming you’re following one! Of course once you’ve bought into these new strategies over and over again you realise that trying to avoid loses is futile. Learn to commit to a strategy, one that suits your lifestyle and personality, and stick with it through thick and thin. Professional, successful traders do not change their strategy several times a year!
Simple is better
It’s a popular misconception to think the more is better. If you are finding it difficult to reach consistency then take an honest look at your method, is it too complex using multiple indicators? It’s possible to be overwhelmed leaving you unable to make proper sound judgements. The most effective strategies are sometimes the simplest and a simple strategy, that’s easy to document and articulate, means that decision making is made easier.
Find a balance
It’s tempting to want to spend multiple hours in front of the charts watching every tick of price movement. Unless your strategy requires this then it’s far more healthy to strike a balance between your trading life and your personal life. Make sure you find time to eat well, exercise and spend time with your family and friends. Maintaining a balanced approach to your life will mean that the time you do spend with the charts will be focused and will foster better quality decision making.
Fail to plan, plan to fail
Going into a trading session without a clear structured idea of your approach for the day will mean the potential for taking random trades or mismanaging the ones you may already have open. Get into the discipline of writing a plan to prepare for the upcoming session. Ideally you should list out the instruments, key levels, why it meets your strategy and how you plan to execute and manage the trade.
Stack the odds in your favour
Its common when you first start trading to explore different time frames, it might seem that trading on the 5 minute chart will yield more opportunities and therefore more profits however the lower time frames require a very specific skill set. You will be required to make faster decisions and concentrate harder for longer periods of time. The ability to do this comes with time a plenty of practice. When you’re starting your trading career you are better of focusing on the higher time frames such as the daily and four hourly, there will be an adequate number of trades and you have plenty of time to review and make decisions as appropriate.
As in any endeavour small changes repeated multiple times can really add up and make a difference. We encourage you to look at the elements identified in this article and see whether any of them sound familiar, if there are then changing your approach may be the key to you moving forward.