Have you ever experienced a trading In Consistently ? Inconsistent Trading is the cycle of successfully making money for a certain period of time, and then becoming overconfident and careless, which usually leads to losing trades.
Anyone who starts down the road to becoming a trader eventually comes across the statistic that 90 % of traders fail to make money when trading the stock market. This statistic deems that over time 80 % lose, 10 % break even and 10 % make money consistently.
To be successful in Intraday trading the stock market, you need to do what the majority of traders don’t do. There is no substitute for hard work and there are no short cuts to becoming a professional and competent trader. In reality, self-education requires both commitment and work.
Most of traders at certain point of time has gone through the cycle of Inconsistent trading. In fact, we experience the similar ups and downs in everyday activities such as sticking to a diet, maintaining personal relationships, and even in sports training.
It’s a challenge to turn a profit through day trading, and although every day trader believes they can make money, most people who attempt day trading end up with a net loss.
You can improve your odds of profitable trading by understanding the risks that can lead to losses and by getting past the assumption that day trading is easy.
In trading, when you are “up” and winning trades, you easily become wrapped up in your results. Your string of winning trades can make you overconfident, which can tempt you to start cutting corners and stop doing the processes that helped you win in the first place.
Once you have reached a very high level of success, and become complacent, you’ll probably fall back down to earth on your behind due to mistakes. You may even suffer a huge loss. It is only during this “down” stage that you realize your mistakes and return to what you were doing previously that made you profitable.
If you have been in this cycle far longer than you’d care to admit, don’t worry.
1. Avoid recency bias
Recency bias is the tendency of traders to be influenced by the outcomes of recent events and trades, and disregard the older (but equally important) pieces of information. This habit is problematic if your trading performance is affected by your fixation on your most recent winning or losing trades.
Here are 4 easy tips to help you eliminate recency bias:
1. Keep a detailed trade journal
2. Write down your trade plan and stick to it!
3. Always keep in mind the bigger picture
4. Don’t let emotions get in the way
2. Never be overconfidence
While it is important to be confident when trading, it is one thing to believe that your system can work in the long run and it’s another thing to think that you know everything about forex trading and that there’s no possible way you can lose.
Once a trader becomes overconfident, he exposes himself to a whole slew of potential problems. The trader may end up trading larger positions sizes than mandated by his trading system. Or once he stops out, he may try jumping in again in the same direction, thinking that price is bound to go his way eventually.
This is why it’s important to stay humble and keep your emotions in check, even when on a winning streak. If you don’t, you may end up becoming very lenient with your execution performance, and your trading account will suffer in the long run.
The best solution is to stick to your plan and keep your ego in check!
3. Trading Methodology
One reason traders might lose money is the absence of a solid trading strategy. Simply looking at a chart in hindsight is not an effective way to create a profitable plan. If you develop a robust strategy, it can be used in many market conditions and can even inform you when to stay out of the market because the conditions are not favorable.
Trading strategy helps prepare you to take action before a profitable opportunity arises, not after. The goal of your strategy should be to uncover patterns and trends that point to trading opportunities that could deliver positive returns. Without doing that research, your results might be largely determined by chance.