One of the most important topics we have discussed before is the need for traders (especially beginners) to Focus on the process rather than the profits.
The idea is that a good, disciplined trader can always turn the odds in his favor if he hones his skills enough to handle any scenario thrown his way.
But becoming a better trader is not as easy as reading a Pipsology textbook and then making as many trades as possible in the hope that experience will teach you the way to profitability.
In fact, many traders can’t even move forward from one or two of the issues they want to address let alone improve their skills.
If you find yourself having to work on the same set of business issues or problems month after month or year after year, you may be guilty of one of the scenarios below:
1. You don’t have concrete plans to deal with it.
Remember that A goal without a plan is just a wish. Solutions to your trading problems shouldn’t be like your New Year’s resolutions that you forget about once you write them in your diary.
Whether it’s something as simple as not placing stop losses or jumping on a trend too early or something more complex like cutting winners and letting losers run, you need to have concrete plans if you want to successfully combat your trading problems.
Set successful business goals. List concrete steps you can take and set a timeline to ensure you follow them. Set metrics to help you measure your success if helpful.
2. You are not thinking about it effectively.
It is possible to have the most detailed game plan and still fail to achieve your trading goals if you do not consciously work on it with every trade.
Let’s say you decide to size your positions based on your account balance instead of using fixed units. Your plan is to calculate the size of each position before entering a trade. You congratulate yourself for being able to do this for a week.
But suddenly, an intraday trading opportunity arose and I chose to get back into the habit of setting fixed position sizes rather than miss out on the move.
You may have thought, “Well, I’ll get back to working on my next trade.” Because you won your trade, you’ll think, “No harm done,” and you’ll be more likely to do it again in the future.
These little tricks and interruptions you give yourself may not affect you in the short term, but they will eventually break your momentum. Next thing you know, you’ll be putting “using dynamic position sizes” back into your goals next year.
3. You don’t track your progress.
Perhaps the most common reason why you are unable to address your trading issues or achieve your goals is because you are not tracking them.
Just as chefs incorporate the modifications they make into their recipes, You should also track and evaluate your progress.
What have you done so far? Are you closer to your goal today than you were a few weeks ago? What factors are helping you and what should you pay attention to? How can you improve faster? A trading notebook is perfect for this.
Reviewing your progress on a regular basis not only gives you a “cheat sheet” in case you slip and revert to old habits, it also helps you put your trading goals into your thought process when trading.
Remember that Trading is a marathon, not a sprint..
If you want to trade another day and become consistently profitable, you must learn how to successfully address your trading problems and build the habit of working toward (and achieving) your trading goals.