By Rob Colville on June 12, 2015 in
What adjectives do you commonly use to describe the kind of trader you hope to become? If you’re like many, then “Profitable,” “Confident,” Experienced,” and “Consistent” are likely among them, and that’s understandable. But did you know you can earn one of those titles almost immediately? Which one do you suppose it is?
Indeed, it takes time to become profitable, experienced, and confident, but consistent trading is different, and is actually well within the reach of most every trader, right here and right now. How, you ask? Well, read on as we identify first what it really means to be a consist ent trader, and then isolate a few important (and highly repeatable) habits that will enable you to get on the fast track to smarter and more consistent trading.
Perhaps one of the reasons why consistent trading can be so elusive is because it’s a term that’s open to interpretation. Afterall, being “consistent” likely means different things to different traders. So what does consistent trading mean to you, and how do you measure it?
For many, it’s rooted in results, meaning that consistent trading suggests a trader generates a certain win rate, or profit margin. To me, however, consistent trading is all about the methods…and I’d strongly encourage you to think of it that way, too.
You see, when you put results aside and focus instead on the process used to produce those results, consistent trading becomes quite simple. It’s universal across every market, trader, and trading style, and entails only doing what works in constant repetition, and almost mechanically.
You can do that starting right now, which is why I say that traders can—and should—achieve consistency long before other goals like profitability, confidence, and experience. Now here are some of those repeatable characteristics that make for more consistent trading.
We’re told so often that there are no “magic bullets” when it comes to trading the markets. No fast and easy way to become profitable, or even to speed up your learning curve. If there were, everyone would be doing it, right? But consistent trading is different, and there are plenty of shortcuts to help you get there!
Actually, this is one of the very few times that we, as traders, can actually make an immediate, positive impact on our performance, and mostly by doing more of what works and less of what doesn’t. So as simply stated as they might be, here are three ways to promote better and more consistent trading starting with your very next market session:
Manage Risk with Exacting Precision: A consistent approach to risk will ensure you limit losses, and grow and protect capital over the long term. Don’t stray by trading excessive size or risking more than your maximum on any given trade. Moreover, be disciplined and trade only qualified set-ups that meet or exceed your desired reward/risk profile.
Maintain Stringent Entry & Exit Rules: Be consistent in your execution and trade management, entering and exiting for maximum efficiency and using the same, proper techniques with each trade. Always use a stop loss, and place it according to the same, accepted methodology each time, with no “freewheeling” or re-inventing rules as trades are unfolding.
Trade Only Select, Proven Markets and Set-ups: Consistent trading is about more than just how you trade; it’s about what you trade, too! Don’t jump from market to market or trade unproven set-ups. Instead, focus all your attention on the market(s) you know and trade the best, and the proven set-ups that best complement your own, unique trading strategy.
In many facets of our lives, we embrace regiment, structure, and consistency. Just think about the countless activities many of us do the exact same way every day, whether it’s our morning routine, the route we drive to work, how we exercise, or the programs we watch on TV. Since consistency is such a big part of our lives, then, it’s curious why consistent trading can sometimes prove so elusive.
Perhaps by exposing the misconception that money and/or win rate helps determine consistency, however, we can show that consistent trading may be much closer and more attainable than you think. In fact, by detaching from results and making an unwavering commitment to such things as handling risk, managing trades, and being disciplined in the markets and/or set-ups you trade, more consistent trading can result almost immediately, a “fast track” kind of scenario that rarely happens throughout our journey as traders.