Reaching the point of trading consistency is the ultimate goal of every trader. And, to achieve that milestone, you will need to incorporate the three pillars of trading success in your trading. These three steps will require discipline and practice before you will be able to fully utilize them in your trading. Let us dive into the pillars for a clear overview each of them.
All over the world, any venture that does not incorporate prepping before kick-starting often tends to fall short of expectations. For example, a surgeon has to prep before carrying out an operation on a patient. A pilot also has to prep before flying. Just like the two examples, trading also requires that people prepare before before the market opens and have a game plan in place.
Unfortunately, a majority of day traders wake up, take a cup of coffee, and begin to trade. Lack of prior preparation in trading can end up costing a trader large sums of money, thereby hurting their financial status. Therefore, it is important to be serious about preparing everything before trading. Compose your mind and come up with a plan on how you are going to go about the entire process.
Visualize your trades and come up with “if-then” statements. For example, if stock XYZ breaks out over this resistance level then I will buy, if it holds below then I will look to short it. These little exercises will help you make decisions when its game time.
Naturally, humans are programmed to protect their own self-worth and ego. So, if for instance, you don’t have a documented report of what you were feeling, thinking, doing, or considering doing at any specific point in the course of your trading session, then you are going to have a hard time becoming better.
You will not recall a thing at the end of the session, and your brain will even try to avoid facing truths and prevent pain. You will end up lying to yourself by utilizing your hindsight to your benefit and in order to justify things.
To avoid that in your trading venture, you need to journal what your feelings and thinking right after a trade. Keep a journal on why you do all the things you do and time stamp the entries. In the long run, this will be one of your most valuable resources and it will help you grow your trading business.
Perhaps the most important pillar of the three is your trading process or how you manage your time and trades each and every day. For instance, there is a process for doing each of the pillars. Trading is also a process with its own set of rules, checklists, guidelines, etc. This is the reality and most important thing every discretionary trader ought to absorb in their mind.
The trading process allows something to lean on for prepping and journaling. In trading, the entire process is a mentality and more of a way of life. It dictates every second through process goals something a trader wants to get better at and implement immediately, not tomorrow, but today. Regrettably, many traders out there don’t know how to better their trading process in order to leap more earnings.
It is important to come up with ways of straightening the entire trading process if you are hoping to achieve your ultimate goals. You need write out in detail your trading day, how you spend your time with premarket prep and how you are journaling trades as well, and this is extremely important, how you manage your trades. You need to thoughtfully write out how you will manage trades including how much you will risk and what your profit targets are.
By doing this you are creating a game plan that you will follow for each and every trade. This helps you avoid placing trades on a whim that don’t fit your plan which will help save you money.
Every trader needs to have a disciplined approach to the markets. Following these three steps will help you understand what type of trader you are and where you make mistakes. Trading requires 100% of your attention so don’t attempt it unless you are willing to give it everything you have.