How do you know when you’re ready to receive a trading education or work with a trading coach or mentor? There’s no one right answer, but take a look at these questions and ask yourself how you rate in these areas
- Have you achieved consistency yet?
- Do you have a trading plan?
- Do you actually follow your trading plan?
- Is your trading system working for you?
- Do you exercise discipline while trading?
- Are you aware of your trading style and habits?
- Who are you as a trader? Are you a buyer or seller? Aggressive or conservative?
- Are you tracking trades to figure out what works best for you and what doesn’t?
- Are you keeping a detailed record of your trades to determine this?
If you’re not totally pleased with the answers, that is understandable. It’s very common to experience inconsistency and varied results when you’re in the early stages of your trading career. But it’s also important to become more self-aware as you move along and begin to understand the areas where you need improvement or shoring up.
The following are some of the ways we see clients failing, and we work with you to address these areas to improve your trading performance so you can reach your goals.
Lack of a Plan
When first starting out, some people trade without a well thought out trading plan. The reasons vary – but some can feel it is too much work writing one out. Those who fall in that category struggle to become successful traders. Your plan helps you stay on track, and can help in overcoming the emotions that will inevitably crop up as you go about trading. The fear factor is one of the hardest things to address and is something that can make or break you in terms of achieving trading success.
Fear crops up when capital is at risk. However, by implementing and following a well thought out plan, you can work to minimize the effects that your emotions have on your trading, and you’ll be able to be more objective in your analysis of the markets.
Trading Profitability Not Growing Consistently
There are various factors that need to be taken into consideration to achieve consistent profitability. By adding some simple tweaks to your daily routine it may help you achieve this goal.
For instance, how confident are you in your first trade? If you don’t have a strong conviction there is no need to rush into a position. Be disciplined! This is easier said than done. However, if we exercise discipline long enough that strict mindset will kick in and take over.
When you’re starting to trade it’s generally preferable to avoid being pulled into big positions and big swings. Smaller positions are typically easier to manage and thus can have a higher percentage of profitability. It is important to consider the importance of each trade equally while weighting them properly.
To increase chances of consistent profitability, it’s also important to build a time block for your trading activity. Without that time block, traders are less likely to find that consistent habit of making, adjusting and closing trades properly.
Starting To Develop Bad Habits
You know you’re in bad habits territory when you realize you’re making the same mistakes over and over again.
This is very common and can happen when you start to develop bad habits that you consistently reinforce. Some examples of bad habits in the making include extending losses by moving stops, constantly leaving money on the table, or exiting profitable trades too early, just to name a few.
Quite often novice traders can’t see past the daily P&L because they become so focused on that number – they’re unable to see the big picture, and find themselves unable to follow their trading plan which could lead them to see more consistent returns.
The solution here is to clearly define what these mistakes or bad habits are, so you can address them one by one. Walk away a little bit so you are not overthinking it or inadvertently engaging in tunnel vision.
Difficulty Handling Trading Losses
Sometimes things don’t go your way – losses are naturally a part of the trading experience. Accepting responsibility and coming to terms with a loss means that you learn to avoid blaming losses on outside manipulators and bad luck. Keep the focus on new set ups and opportunities, not regrets or what could have been. Part of learning how to handle losses is to eradicate the “make it back” mentality. Trades undertaken with this type of mindset carry too much emotion and typically lead to very costly mistakes. Learn to identify when you have an impulsive state of mind – and then learn how to control and manage it.
Trading Burn Out
You’ll definitely know when you start to experience burn out. You’re tired, not doing the research, and/or no longer keeping records of your trades. You can feel physically and emotionally overloaded and simply not feel able to sustain the efforts required to come back from trading day losses or deficits. This state isn’t a reflection on your skill, technique or motivation. Quite literally, it’s a sign that there is not enough “psychological fuel” left in the tank.
It happens to everyone at one point or another in his or her trading endeavors. At this stage sometimes the best solution is to take a break from trading and get away from things for a while. Even though you may have learned and implemented many strategies over the course of your trading career, if you are not producing rewarding results, then the current market conditions are not favoring your strategy and you need to adjust.
You may need to take a step back and clear your head so you can get back to the basics and see things for what they are. By clearing your mind from previous strategies that have not worked, you can begin to see the trends more clearly so you are able to identify not only what is working and why, but also what is not working and why.
Join myself, Joseph Rokop – Managing Director of Commodities and Equities, to take your trading to the next level!
Have a profitable day!