It’s easy to abandon your trading plan in favor of maximizing your profits when the market is going your way and it does so at breakneck speed.
But unless you have a strict regimen, your victories will be sporadic at best. You may even lose your profits due to bad trading decisions!
Here are some points to remember to help you become consistently profitable:
1. Scalability is a risk management tool
Expanding on winning positions helps prevent FOMO and helps maximize profits while your trading idea is still valid.
Just remember that the more you add to a position, the more price movements will affect your profit and loss, and you are more likely to make emotional trading decisions.
If your risk management approach leans towards protecting paper profits, then you should consider expansion or partial profit taking.
Hey, a win is a win, right? $200 in profits made can still feed your cats better than $1,000 in paper winnings.
2. You don’t need a home run to win the game
It’s tempting to share your 10x Earn $$$ story with your friends on Reddit but remember that you don’t need to catch tops and bottoms or trade all popular assets to become profitable in the long run.
Consider buying high-end assets and selling them at a higher price, or trading less popular (but still performing) assets that have better risk profiles.
If you do your research right and manage your risk, there will be other opportunities to keep you winning consistently.
3. Winning trades can do as much harm to traders as losing trades
Overconfidence from winning trades can tempt you to start cutting corners and stop doing the trades that helped you win in the first place.
Study your trading journal to see what habits you need to keep doing and what decisions you need to avoid. Incorporate it into your trading plan and stick to it. to. the. Plan.
4. Trading is a marathon, not a sprint
Trading is a high-performance endeavor that requires focus, focus, and alertness.
You can’t be all that if you spend your whole day tagging your charts and checking your FinTwit feed for news and opinions.
Aim for top performance. Take care of your mind and body. Eat well, get enough sleep, and exercise so you don’t make avoidable mistakes like getting in Wrong asset codes or position sizes.
5. The market doesn’t care about your analysis
Just because you and your market champions trust your analysis doesn’t mean the price will go your way.
Price action is the sum of the decisions of thousands of traders – both institutional and individual – who don’t know you.
The market can turn on your trade and it can turn on a dime. Ensure you are prepared by consistently managing risk and only risking what you can afford to lose.
6. You are responsible for your decisions
Traders who take responsibility for the winners And Losers know that their profits and losses are the product of their trading system and how well they execute their plan.
They might say things like:
- “I maximized the move 5x because I squeezed my trade and used my trailing stop loss as planned.”
- “I turned my small losses into big ones because I didn’t want to be wrong.”
- “Our paper gain +30.8% closed at breakeven because I didn’t plan to take profit until +50%”
So, no, you didn’t win just because.”Baba Musk“He was right on your side as you didn’t lose because of FUD or because of they Realtors were out to get you.
The sooner you take responsibility for your decisions, the sooner you will be able to kick bad trading habits and improve your trading system for more consistent profits.