The summer months are generally a time when the markets take a breather as vacations become more important than work.
You may want to be a little more selective on your trading opportunities and ensure that there is actual volume involved in the market you trade.
The summer is also a great time to “check-in” on your results so far and see if you are trading consistently according to your plan.
Have you been consistent with risk, position sizing, and keeping your focus on the trading method you have tested and shown to have a positive expectation?
You’ve Been Unprofessional (maybe)
There is a very good chance that you have not been consistent and when faced with losing trades, you’ve either switched trading methods repeatedly or worse, ignored proper risk protocols.
Maybe you’ve let your emotions get the better of you and it’s been a downward spiral ever since. Even professionals have bad spells but most of them find the ability to pull themselves back up and regain their professional approach that led them to success.
The good news is that as long as you’ve not blown out your trading account, there is still time become professional in your approach and perhaps finally reap the rewards you know are available in the markets.
Act On These Trading Tips
You don’t need ground-breaking ideas to turn your trading around. Often times complex solutions do worse than simple approaches and in many things, especially in trading, you want things to be a simple as they can be while still providing the results you seek.
1. Focus on one trading method
The internet, trading blogs, social media and all thing electronic are great but come with a price. The ready access to information overload is an ever present risk and in trading, more is not always better.
Emails are crammed with system marketers that have “unlocked the trading secret that has been tucked away in a vault for decades”.
On a lesser scale, an article or blog post about an indicator setting has caused many traders to add that to their trading toolbox.
Watching YouTube trading videos and how other traders perform can cause many to simply abandon what they are doing and they try to mirror what they are watching.
From personal experience, too much information can often times cripple your decision making process. I’ve had occasions where trading setups occurred according to plan but I failed to execute.
I would start adding in other factors that had nothing to with my how I was trading at the time. Stuck in analysis and second guessing, the price would travel without me.
It’s a disease.
Better said, it’s a dis-ease with the method they are currently using because they are not getting the results they want. Specifically, they are not getting the results other trader’s are getting.
The Turtles are a great example that the system is not the main component of success but the person using it is. Comparing your success or gauging your potential success on someone else is not something that has merit.
In fact, this comparison can be a direct blow on your self-esteem and give you an unfair criticism of yourself.
The failure and success of others has nothing to do with you.
Pick up 2-3 trading methods or systems that coincide with your goals such as day or swing trading, and run a back test with a random data sort. The one’s with potential, forward test them and the one that fits you is the keeper.
Take yourself off all email lists, stay away from trading forums and filter out all the noise (news reports, talking heads) that have no effect on your system.
When I did this exercise, I didn’t need the open/close of the candles so I used bar charts instead. There’s a lot to be said for noise elimination.
Continue your testing and only commit real money when you have a proven track record of success with whatever method you choose. While simulation trading is no substitute for being in the market, it does give you a framework in understanding your system of trading and the potential it holds.
The key is FOCUS.
2. Follow a rigid capital exposure plan
Going for the big one with a position size that is having you risk multiples of what your plan calls for, will more than likely blow your account. At the very least, it will set in motion a pattern of haphazard trading with the mindset of a hobbyist that has little chance of success.
This is one habit you don’t want to have to contend with.
Approach exposure like a professional from the beginning and don’t try to load the boat on a trade that is “destined for massive success”.
Equity curve pointing south?
Don’t try to turn the corner on the next trade. Realize that the markets will be here tomorrow and you can chip away at those losses. There is another day to slowly turn the curve in the right direction.
Commit to a modest .5-1% exposure per trade or something even smaller. Just make it small enough that you can withstand blows to your account that come from foolish mistakes and trades that simply lose.
Set an amount that you will have for maximum account exposure across all open trades. This is particularly important for Forex traders who can easily trading 3,4,5 currency pairs at the same time.
Not everyone has the same risk tolerance for themselves or their trading method so any suggestion is simply a rule of thumb. Your situation may allow for lower or higher risk just ensure that whatever the risk amount is, that you can withstand multiple losers in a row without too much of an adverse effect on your account.
You are welcome to download this capital growth app which will track account growth and even how/when to take withdrawals from your trading account.
3. Review your performance daily
Quite frankly, this is something that you should have been doing since your cracked open your first chart.
This is so critical and can alert you to issues early on that can devastate your chances of success. I used a free screen recording software (camstudio) to talk through trades and even did recaps of my daily performance.
Questions you may want to ask are:
- Did the trades follow the method? Walk through the entire trade from start to finish.
- Was my capital exposure plan on point?
- Did I exit the losers according to the stop?
- Did I stretch profit targets based on hope and greed?
I also print out a chart of setups and the completion of the trade. Even though it is just as easy to use screen capture software such as Jing, I still prefer the hard copy. Making notes right on the paper, I feel, makes a huge difference in knowledge retention.
For those of you who like to dig deep with numbers, download this free Trade Tracker software to get all those detail.
These three steps may seem easy to do and that’s good….because they are.
You just need the intention and discipline to do them.
Trading is one of those rare professions that success or failure is all on you. It is not the fault of your broker, your charts, the talking heads or the Fed if you fail.
Trading does not discriminate and really, it is up to you which side of the finish line you want to end up on.