Today we have a chance to hear from Mo Christiensen of Trading Advice Blog. I asked Mo to teach us how we can do something that aludes even the greatest traders...stay CONSISTENTLY PROFITABLE!!
We're receiving a lot of emails these days from people asking for guidance and help unraveling their trading. With all the variables involved, people want advice figuring out where they're going wrong, or where they can improve.
So here are some suggestions:
Start by taking this free self assessment. It will help you to evaluate your trading around some of the primary success factors for consistent trading.
Second, go through the list of success factors below step by step. Evaluate each one. You'll be able to either tick it off as 'satisfactory' or you'll want to dig deeper and find a solution.
Find a trading method you can be confident in
This is THE basic requirement for every trader. With everything else you need to focus on as a trader, you want to know that your trading method has positive expectancy. That doesn't mean each trade is going to be profitable- but it does mean that you can rely on a regular flow of signals that if you execute correctly will lead to overall profitability.
For new or struggling traders we always advise finding a system with simple entry and exit signals that don't rely on a lot of interpretation in the heat of things. Plain, no nonsense signals that say 'get in' or 'get out' are best. That’s the beauty of MarketClub's Trade Triangles - there's no guesswork involved.
Are you executing correctly?
Many new and struggling traders face the challenge of managing their emotions, which get in the way of precise and focused action when it comes to placing an order in the market. This is almost entirely fear based and is usually caused by a lack of confidence in the system they are trading. Second guessing is the mortal enemy of consistent profitability!
Again, this is where Trade Triangles excel - the signals are so clear that you can see with absolute clarity what you are meant to be doing. So if you don't take the signals, you know immediately that what you need to work on is your execution. Both MarketClub and Ino TV have a rich selection of videos with more on this subject.
Are your profit targets appropriately balanced with your risk? In other words when you analyze your trades, and compare the profitable ones to the losing ones, does the amount of each profitable trade exceed the amount of each losing trade - preferably by 2 or 3 times?
This is important. Many new traders make the mistake of thinking that their consistent profitability will come about by having more winning trades than losing trades. They get despondent when they have a string of losing trades and begin to doubt their system. Yes ideally your system will have more profitable trades than losing ones. However even if you have 10 winning trades and 10 losing trades, or even 5 winning trades and 15 losing trades, if each of your winning trades is significantly more profitable than your losing trades, then you will be consistently profitable over time. The reverse is equally true, so make sure your winners are bigger than your losers.
Manage those emotions
What's your favorite? Fear, greed, jealousy, guilt? They're all bubbling away in there somewhere and affecting the way we think and act. Here are two pieces of counsel for traders:
The first is clear, clear, clear and clear. Find a method that you can use to clear your emotions! This may sound a bit touchy 'feely' to you, but believe me it will translate into such significant improvements in your trading, and in your life in general, that you'll forever consider it to be one of the most practical things you ever did for yourself. We recommend two methods that are particularly effective.
Second and in closing this post, I want to come back to MarketClub. Adam recently recorded a video on the number one account killer: emotion in trading, and what he says is spot on. Trading Triangles will help you take the emotion out of your trading. Even if you have challenges managing your emotions, if you can just marshall your focus and use the simplicity of the Trade Triangles, over time you'll build the confidence that will allow you to succeed.
Mo Christiensen is co-editor of the popular tradingadviceblog.com which specializes in trading advice for new and struggling traders.