How to remain consistent while trading the financial markets
Today is a big day for us, as two years ago, on the 6th of June in 2020, we launched our company in attempts to be a valuable contributor to the trading industry and help all types of traders: beginners, advanced traders, those who are lost in the journey and so on. However, our personal trading experience goes way back, as we have been trading for more than five years. Throughout this long and interesting journey, we have had many ups and downs. After all, nothing in life is easy, and you have to overcome some obstacles in order to become consistent in what you are doing.
Reaching the doors of consistency is the main aim of every beginning and practising trader. Although many individuals may think of consistency as an upward-sloping straight line, years of practice and experience show us that it is rather an ascending channel. Being consistent does not necessarily signify that every trading day/week/month must be a winning one. You will always have losing streaks, unsuccessful trades and so forth. Instead, it indicates that by having a working trading strategy and obeying it, you are gonna be profitable in the long run.
Below, we have listed and scrutinized some of the rules that you can implement in your trading that can give you a hand in becoming and remaining consistent:
1. Have a clearly identified trading plan and stick to it
This may seem like a pretty basic rule, but believe me, most people never go past this pretty fundamental stage. It is really straightforward and crucial that you need to have a backtested trading strategy, and it could be anything you feel comfortable with. Whether you like to open positions once two Exponential Moving Averages cross each other, or once specific patterns are formed and the price is ready to move according to your bias and so forth.
2. Stop changing your trading strategy every time you encounter losses and feel frustrated
Trading is a game of numbers. Yes, you will experience many losing days. Yes, you will feel frustrated and angry to the stage that you might smash the screen of your computer. After all, emotions and psychology play a huge role in trading. Believe me, changing your strategy every week and trying to do something new will never be an option in this case. I see many people make this mistake and get perplexed on why they are not profitable yet. The right thing to do is to stick to one single trading plan and ride along till the end. At the end, if you are risk tolerant and patient, you will always be profitable in the long run.
3. Manage your risk
This can’t be said enough. I see people trade the markets like a casino in attempts to be profitable and successful in the long run. Just because you think the setup is perfect, or that you have seen your favourite author’s technical analysis nicely align with yours, you should not be risking big portions of your account on a single position. You should have a well-defined risk management plan. Whether it is risking 1% on all positions, or risking 5% per position on Friday afternoons in order to drink lots of champagne on the weekends. Bottom line: whatever you do, do it with a plan and keep things consistent. Personally, we have always been risking 1-2% per single position, as this is something we are comfortable with. If you feel like you are not mentally ready to trade a live account, you can start even smaller (0.5% per trade) and then gradually go bigger.
4. Do not overtrade and learn to stay off the markets when necessary
Many people think that opening more trades will generate them more profits. However, less is always more, and quality will always be over quantity. Depending on what type of a trader you are and what your trading strategy looks like, there should be an average number of trades that you enter every day/week. If you are a swing traders that tries capturing nice long-term waves, 3-5 trades per week would most likely be more than enough. If you are a scalper that loves sitting in front of the charts for hours, your strategy would probably consist of entering 15-20 short-term positions per day. Long story short, have a predetermined range and do not go off the barriers of it.
The above stated points are some of the tips and strategies that could help you in remaining consistent in the markets. They may seem pretty simple, but remember that beauty lies within simplicity. There is no need to make things more complicated when you can simply stick to basic principles and succeed in this industry.
Have a great trading week, family!
Investroy
Reaching the doors of consistency is the main aim of every beginning and practising trader. Although many individuals may think of consistency as an upward-sloping straight line, years of practice and experience show us that it is rather an ascending channel. Being consistent does not necessarily signify that every trading day/week/month must be a winning one. You will always have losing streaks, unsuccessful trades and so forth. Instead, it indicates that by having a working trading strategy and obeying it, you are gonna be profitable in the long run.
Below, we have listed and scrutinized some of the rules that you can implement in your trading that can give you a hand in becoming and remaining consistent:
1. Have a clearly identified trading plan and stick to it
This may seem like a pretty basic rule, but believe me, most people never go past this pretty fundamental stage. It is really straightforward and crucial that you need to have a backtested trading strategy, and it could be anything you feel comfortable with. Whether you like to open positions once two Exponential Moving Averages cross each other, or once specific patterns are formed and the price is ready to move according to your bias and so forth.
2. Stop changing your trading strategy every time you encounter losses and feel frustrated
Trading is a game of numbers. Yes, you will experience many losing days. Yes, you will feel frustrated and angry to the stage that you might smash the screen of your computer. After all, emotions and psychology play a huge role in trading. Believe me, changing your strategy every week and trying to do something new will never be an option in this case. I see many people make this mistake and get perplexed on why they are not profitable yet. The right thing to do is to stick to one single trading plan and ride along till the end. At the end, if you are risk tolerant and patient, you will always be profitable in the long run.
3. Manage your risk
This can’t be said enough. I see people trade the markets like a casino in attempts to be profitable and successful in the long run. Just because you think the setup is perfect, or that you have seen your favourite author’s technical analysis nicely align with yours, you should not be risking big portions of your account on a single position. You should have a well-defined risk management plan. Whether it is risking 1% on all positions, or risking 5% per position on Friday afternoons in order to drink lots of champagne on the weekends. Bottom line: whatever you do, do it with a plan and keep things consistent. Personally, we have always been risking 1-2% per single position, as this is something we are comfortable with. If you feel like you are not mentally ready to trade a live account, you can start even smaller (0.5% per trade) and then gradually go bigger.
4. Do not overtrade and learn to stay off the markets when necessary
Many people think that opening more trades will generate them more profits. However, less is always more, and quality will always be over quantity. Depending on what type of a trader you are and what your trading strategy looks like, there should be an average number of trades that you enter every day/week. If you are a swing traders that tries capturing nice long-term waves, 3-5 trades per week would most likely be more than enough. If you are a scalper that loves sitting in front of the charts for hours, your strategy would probably consist of entering 15-20 short-term positions per day. Long story short, have a predetermined range and do not go off the barriers of it.
The above stated points are some of the tips and strategies that could help you in remaining consistent in the markets. They may seem pretty simple, but remember that beauty lies within simplicity. There is no need to make things more complicated when you can simply stick to basic principles and succeed in this industry.
Have a great trading week, family!
Investroy