How to Be Consistent in Trading ?
The main goal in trading should be about being consistent and achieving steady returns.
It doesn’t matter whether you are a day trader, swing trader, or scalper; being consistent is the most significant criterion for success.
Being consistent
To achieve consistent returns, you should maintain consistency in your activities.
This means sticking to your plan with discipline—following the same strategy, segment, risk management, etc., for a significant period.
Only consider tweaking your strategy if you do not achieve consistent returns.
While advising a beginner to be disciplined is easy, following it is challenging.
One simple hack for discipline is to dig deep. Analyze why you lack discipline and understand its root cause.
Ask questions like: Why do I lack discipline? Is it a pattern in real life or only during trading? If so, why? Are there emotional baggages hindering discipline? Be true to yourself and answer these questions.
In my case, the root cause was the strategy. I now follow the same strategy with discipline.
When I started out, I kept changing my entry points, exit points, stock selection criteria, etc., because I didn’t understand the reality of trading and trading strategy.
Having patience in managing trades can help you become a disciplined trader. Wait for the right entry, exit at the appropriate price and date.
Controlling your emotions is also super important in trading.
It means not making quick decisions based on how you feel, whether you’re really excited or worried.
Having a plan you stick to helps keep emotions out of your choices and makes sure you stay disciplined.
Avoiding taking big risks and managing your money wisely is part of this too.
It’s also crucial to think about the long term and not let short-term ups and downs in the market mess with your plans.
Overall, staying calm and thinking smart is the key to doing well in trading.
Having a consistent routine in trading is really important. This means setting up a regular schedule for your trading activities.
It helps build good habits and makes your decision-making more reliable. When you have a routine, you’re more likely to stick to your plan and avoid impulsive moves.
It brings stability to your trading, making it easier to track your progress and learn from your experiences.
So, having a steady routine isn’t just about when you trade but about creating a structure that supports disciplined and effective trading practices.
Consistent profitability
Earning consistent returns is not as easy as it may sound. There are a few factors to consider to gain consistent profits.
First of all, set realistic expectations. Having a false sense of reality in the stock market may prevent you from achieving consistent returns.
For example, aiming for 10-20% almost every month can provide consistent returns, but 50-100% is unrealistic. So, having realistic expectations will contribute to consistency.
This stems from having sound knowledge in financial markets.
While it’s not mandatory to earn a certificate in the stock market or financial markets, learning is the most essential step in your trading journey.
Understanding basic theories, along with risk and emotional management, will help you achieve consistent returns.
Having a solid trading plan and following it with discipline can aid in earning consistent returns. Detailing what should be included in the trading plan is crucial.
While a simple risk-reward ratio may contribute to long-term profitability, there’s more to it.
The first hack is to take trades that align with both the loss percentage per trade and the strategy’s stop-loss price.
Avoid random trades and maintain consistent stop-loss and profit targets each time for reliable returns.
The second one is to set up a notion database for calculating the aforementioned stop-loss price. In my case, I use a strategy where I can calculate everything beforehand.
By noting down key parameters such as possible entry price, support and resistance/swing points, loss percentage, and ATR, you can quickly calculate your stop loss value, aligning with the risk management rule of your strategy.
This method, taking just 2 minutes, provides a versatile approach for anything from scalping to swing trading.
The next tip is to save up for rainy days. Since gaining a regular and consistent income in the stock market is not guaranteed, when you exceed your monthly goal, set aside the surplus for potential “loss months.”
Plan to have 3-6 months of income as a backup, ensuring you have a consistent amount for your monthly expenses.
Keeping a trading journal is a smart move in trading. It’s like a diary where you record all your trades and thoughts about them. This helps you track your performance over time, letting you see what’s working and what needs improvement.
It’s a practical way to learn from both successful and not-so-successful trades. By jotting down the details, you can identify patterns in your decisions and refine your strategy.
The trading journal acts as a valuable tool for self-reflection, helping you become a more informed and skillful trader over the long run.
Diversifying your portfolio is a wise strategy in trading. It means not putting all your money into one type of investment but spreading it across different assets.
This helps manage risk because if one investment performs poorly, others may balance it out.
Diversification can include various types of stocks, bonds, or other financial instruments.
By having a mix, you’re less vulnerable to the ups and downs of a single market or industry.
It’s like not putting all your eggs in one basket, reducing the impact of potential losses on your overall portfolio and promoting a more stable and balanced investment approach.
Conclusion
Develop a clear strategy, defining entry/exit points, risk management, and profit targets.
Risk a small percentage of capital per trade to protect against significant losses.
Maintain discipline by sticking to your trading plan, regardless of market fluctuations.
Stay informed about market trends, news, and strategies for adapting to changing conditions.
Keep emotions in check, avoiding impulsive decisions driven by fear or greed.
Establish a consistent routine for trading activities to build good habits.
Regularly review and assess trades, learning from both successes and failures.
Set achievable and realistic trading goals to maintain focus and avoid unnecessary risks.
Diversify your portfolio to manage risk by spreading investments across different assets.
Keep a trading journal to track performance, analyzing trades for continuous improvement.
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