This is always one of the biggest challenges to becoming a full time profitable trader.
Almost all traders will have a battle against becoming consistent.
Its something that I definitely struggled with when starting out in my trading journey. I would go through weeks of profitable trades and building my account and then equally go through losing streaks and essentially wiping out my wins. Or simply from one week to the next my trading results would fluctuate like crazy…
This will inevitably have a detrimental effect on your trading results but more importantly it will have a major negative effect on your mentality and well being as you become more and more frustrated with inconsistent trading results.
So today I wanted to sit down and go through this in topic to explain some ways to combat this problem and improve your consistency.
Expectations Firstly its important to define the goal… what does consistent trading look like FOR YOU?
Because believe it or not, the answer to that question is different for different people. So, are you looking to be consistent over the course of each day? Over the course of each week?… Define a time period that is realistic for you to determine your consistency and make sure it has enough time to measure enough trades to account for wins and losses.
Are you looking to be consistent in terms of profit over this period of time? Or are you looking to be consistent in terms of percentage of trades won and loss?
Secondly its important to know that you WONT win every trade.. so any goal that sets out to do so won’t be realistic and won’t be achievable. Winning 80% of your trades is a VERY consistent win rate percentage.
No Silver Bullet The honest truth is that there’s no secret formula or special sauce that will turn an inconsistent trader into a consistently profitable one overnight. As with everything it will take gradual steps of improvement but I can share with you some methods and insights to help speed that process up.
Consistent Results Come From Consistent Processes The main reason behind inconsistent results is that traders are using an inconsistent process for each trade they place. If one trade is placed based on one strategy and then you are not using that same strategy on the next trade then you can expect any trading results will reflect that. Its important to understand your strategy in trading intimately… you should have the confidence in your strategy that if you were to lose a trade, you are confident that over time your strategy will work out. Typically this scattergun approach where traders jump from one strategy to the next is the main cause of why their results are inconsistent.
Review Your Strategy Finally you must of course have a very robust strategy to use in the first place… if the strategy you are using isn’t robust and doesn’t provide an ‘edge’ on the market… if you haven’t done the research and backtesting necessary to know your edge on the market then you can be sure that any result from using that strategy will be inconsistent.
@OptimoomFX, Thanks for watching and sharing the coins! 👌
Michael_Harding
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Curious, how do you measure consistency over discipline when markets slow down in the summer season? You also mentioned if someone has a win rate of 80% that's great, but what if all those wins are small and the 20% of loses are big? Would the win/loss ratio still matter? Last question, how do traders adapt to changing market conditions for risk management purposes without that reflecting on the trading statement making it look like the trader is jumping around? So I guess the real question is: How important is it to show consistency on trading statements?
"How do you measure consistency over discipline when markets slow down in the summer season?"
Don't confuse consistency with discipline.. they are two separate concepts, in most cases you need discipline in order to reach consistency.
"You also mentioned if someone has a win rate of 80% that's great, but what if all those wins are small and the 20% of loses are big?"
We address this in the video to some degree, any trader needs to define for themselves what "consistency" means to them, specific to their strategy and mindset. And what you refer to here in your question isn't a problem of consistency, its a problem of risk management. A different topic.
"How do traders adapt to changing market conditions for risk management purposes without that reflecting on the trading statement making it look like the trader is jumping around?"
Consistency shows itself more in the processes a trader takes, analysis processes that are used consistently for example, always using top down analysis when entering a trade would show the results of itself in the outcomes. If you have inconsistent inputs into a process (trading), then the outcomes (trading statement) will reflect that inconsistency. Secondly you can still keep your trading processes consistent while adapting risk management to market conditions.
Michael_Harding
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@JoelWarby, okay I'm just trying to understand your perspective to help you out because it sounds like you keep wiping out your profitable trades by trying to be consistent. But what I'm saying is sure consistency is great for improving your discipline. When it comes to discipline its about controlling your impulses based on focusing on the money situation. I wouldn't say discipline is about making sure you're doing your analysis the same way over and over. All I'm saying is that I think it's a discipline issue with why your trades are getting wiped out. You can't exactly deplete consistency but you can deplete discipline and discipline is like a muscle that can get exhausted. Think of this for a second, to become a US Navy SEAL it's all about discipline. Most people don't make it. If it was all about consistency everyone would make it.
JoelWarby
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@Michael_Harding, As I say… you are talking about discipline. Not consistency.
A different topic.
I’ll let you know when I make a video about discipline.
SeesomeGriff
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I really like this I am in 6 weeks into trading option contracts and it’s been an emotional roller coaster and even though I have a good foundation of knowledge I fall for traps and get caught in my emotions. Tomorrow is a new day and I’m excited to approach it with patience and confidence. Thank you for your thoughts