It’s easy to abandon your trading plan in favor of maximizing your wins when the market is going your way and doing it in hyperspeed.
But unless you have rock-solid discipline, your wins will be spotty at best. You might even lose your profits to bad trading decisions!
Here are points to remember to help you become consistently profitable:
1. Scaling in and out is a risk management tool
Scaling into winning positions helps prevent FOMO and helps maximize profits while your trade idea is still valid.
Just remember that the more you add to a position, the bigger the price moves will impact your P/L and the likelier you are to make emotional trading decisions.
If your risk management style leans towards protecting paper profits, then you should consider scaling out or taking partial profits.
Hey, a win is a win, right? $200 in realized profits can still feed your cats better than $1,000 worth of paper profits.
2. You don’t need home runs to win the game
It’s tempting to share your 10x gain$$$ story with your Reddit friends but remember that you don’t need to catch the tops and bottoms or trade all the trending assets to become profitable in the long run.
Consider buying high and selling higher or trading less popular (but still in play) assets that have better risk ratios.
If you do your research right and manage your risks, there WILL be other opportunities to keep you consistently profitable.
3. Winning trades can do as much damage to traders as losing trades
Overconfidence from winning trades can tempt you to start cutting corners and stop doing the processes that helped you win in the first place.
Study your trading journal for the habits that you need to keep doing and for the decisions that you need to avoid. Incorporate those into your trading plan and Stick. To. The. Plan.
4. Trading is a marathon and not a sprint
Trading is a high-performance endeavor that requires concentration, focus, and alertness.
You can’t be all that if you spend all day errday marking your charts and checking your FinTwit feed for news AND opinions.
Aim for peak performance. Take care of your mind and body. Eat well and get enough sleep and exercise so you won’t make avoidable mistakes like entering wrong asset symbols or position sizes.
5. The market doesn’t care about your analysis
Just because you and your market heroes are confident in your analyses doesn’t mean the price will go your way.
Price action is the sum of the decisions of thousands of traders – both institutional and retail – who don’t know you.
The market can turn against your trade and it can turn on a dime. Make sure you’re prepared by constantly managing your risks and only risking what you can afford to lose.
6. YOU’RE responsible for your decisions
Traders who take responsibility for their winners and their losers know that their P/L is a product of their trading system and how well they executed their plan.
They would probably say things like:
- “I maximized a 5x move because I pressed my trade and used a trailing stop as planned.”
- “I turned my small losses into BIG losses because I didn’t want to be wrong.”
- “My +30.8% paper gains closed at break-even because I hadn’t planned on taking profits until +50%”
So, no, you didn’t win just because trading gods were on your side, just as you didn’t lose because of FUD or because sus brokers were out to get you.
The sooner you take responsibility for your decisions, the sooner you can shed bad trading habits and refine your trading system to yield more consistent profits.
