Professional Trader’s Guide to Consistent Profits

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Do you find that your trading results are not as consistent as you want? Are you wanting to confidently repeat when you have winners? Of course! Goal #1 in trading is profiting. The second is then making money consistently. Third is steadily increasing profits.

Your trading profits are primarily controlled by what YOU do, much more than what the markets do. There are traders profiting every day, so blaming the markets is just an excuse. If you want to profit consistently, then get more consistent in what you do in your trading.

A good starting point is to understand is that trading is a process. That’s why making use of a proven trading system is so vital. When it comes to making improvements in a process, and especially when your objective is achieve greater consistency, here are three simple steps you can take to realize the most substantial impact on your consistency.

Step 1. Clearly define and document your system. One of the more common errors made by traders, particularly regarding consistency is that they don’t take the time to make sure their system is well-defined and written down.

When you have an activity that isn’t documented, there will probably be inconsistencies in how the task gets performed. The reason the military is so big on following procedure: they insist that things be done in a standard, reliable and predictable manner. The same thing goes for how you trade.

Step 2. Analyze your trading system’s critical aspects. A smart person once said that for you to improve anything, you have to start with first measuring it. In what other way are you to know if you’re making progress? With trading you have several calculable aspects that make the bottom line what it is, in addition to the all-important account balance at the end of the month.

Businesses in all industries have certain aspects that determine the profitability of the business. Savvy business owners know to monitor those aspects and assign metrics to them. The reason that these are so important is because by measuring each of them, you can then see specifically where your opportunities for improving your system are.

Step 3. Make improvements in a controlled manner. Once you’ve conducted an analysis of your system, you now have the ability to focus on specific facets of your system to make improvements. By utilizing system analysis, you can modify your system and test – with zero risk – either through back-testing or in a demo account and see if the change improves or hurts the system’s performance – and if there are any trade-offs.

As an example, suppose you run the metrics on your system and find that your winning percentage is currently 37 percent. You’ve got an idea on how to improve it to 53 percent, which you “think” would increase your overall returns. Next would be to run the analysis on your newly modified system on real market data. By looking at the results, you can see if this change accomplished it objective, but also if there were trade-offs in other aspects of your system performance, such as a reduced number of trading opportunities. You then can make an educated decision on whether you should stick with your current system or go with the modification.

Summary. Trading is a process from which you wish to have consistent – and reliable – results. Spotting, entering and executing trades is an activity that you repeat on a regular basis, so consistent profits is your goal, focus on making what you do consistent.

Step 1 is to make sure that your system is well-defined and written down. By clarifying your system and then documenting it, you improve your likelihood to repeat what you do consistently.
Step 2 is to measure your trading to establish where you are now versus your desired goal. This also gives you insight into your opportunities for improvement.
Step 3 is to track your metrics and take steps in a meticulous manner and without risking money un-necessarily.

There are a handful of metrics regarding your trading business that directly determine your bottom line. Through analyzing your system’s performance and purposefully focusing on these metrics, you give yourself the best means to increase your profits. Additionally, this will provide a major boost to your ability to consistently produce profits.
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