Trader Struggles - Consistency

Every trading podcast has an intro with music and all that stuff. Let's not do that. Let's just get straight into it. You guys don't need to listen to my jingle. Let's just get started. So today's question or struggle from a trader is this. The question is, what are you struggling with as a trader? This trader's answer is, I'd say sticking to my pre-market analysis. If it goes how I expect, fine. But then if price does something else, I often take trades without doing new analysis. Getting there though, I get the vibe just from this trader's self-awareness of this problem that they're going to sort this out themselves and they don't need my help with it. But I will give my thoughts on this because it's a really important topic or subject that I struggled with in the past as well. And this sort of question applies to trading in general, not just pre-market analysis. So let me share my thoughts and experiences with this type of struggle as an aspiring trader. The key to success in any form of trading is consistency. Whether you're a systematic trader or a discretionary trader, you must be consistent in your approach to trading and analysis. If you are inconsistent, then you cannot improve because you cannot improve what you can't measure. One way to increase the probability of you sticking to the plan dictated by your own pre-market analysis is to incorporate third-party accountability. So this could mean joining some sort of trading group or mentorship, or it could simply mean posting your pre-market analysis on social media like Twitter before you begin trading. Even if no one reads it, at least it's out there in the world and you can reflect on what happened after the day is over and see how consistent your actions were with your pre-market analysis. Now, depending on your personality, this might help or it might hinder your performance and make you more self-conscious and overthink your decisions. So it's not something I'd recommend to everybody, but it's worth a try if you think you can handle the added scrutiny of publicly announcing your intentions. You can also just hold a journal, write down your pre-market analysis notes and intentions before trading begins, and after you've stopped trading, jot down the decisions you made throughout the day and see if they're consistent with what you plan to do. Simply writing down the words "I screwed up again today" enough times will trigger something in your mind eventually, and I'm speaking from experience. One day you'll write it down and you'll think "this is ridiculous, I'm making this mistake way too often, I'm not improving and if I don't figure this out, I might not ever achieve success at trading and I really need to step up my game because this is embarrassing." That's pretty much how journaling made me feel back when I was struggling with breaking my rules all the time, putting on too much risk, cutting trades early because I was scared of losing or taking profit too early because I was scared of not making the most amount of money. I used to journal about those problems all the time and after a while, after a month or two of constantly reminding myself of how much I sucked at trading, I started to take it seriously and make serious commitments to improving. I would just pick one element of my trading that I was screwing up and focus on that until it was fixed and then I'd move on to the next problem. So that was inconsistency, so not taking trades I should be or taking trades I shouldn't be. I just stopped that and I would just focus on only ever taking trades that meet my trading rules and then if the next problem was putting on too much risk getting greedy then I would focus on that and improve that and I wouldn't move on to the next problem until that problem was fixed. It was slow, it cost me a bit of money in the beginning but I kept my account size small because I knew I was learning and over time I overcame those problems through journaling. I don't keep a daily journal anymore, I reflect on my trading quarterly now because I have a handle on my day-to-day trading psychology and I don't make silly mistakes anymore, at least not consistently. The mistakes I make these days are usually due to complacency and being too comfortable with my trading and routine. It's not from bad trading psychology and bad habits typically but journaling and or sharing your experiences on social media can really help increase your accountability to yourself and your goals. That's my practical thoughts on the matter anyway, that's a technique you can use journaling and maybe sharing your experience on social media to be accountable to what you say you're going to do. The second thing I want to mention regarding this issue is the importance of reminding yourself before you start trading every day of the importance of consistency. Again, you cannot improve what you can't measure and inconsistent actions versus your trading plan introduces a level of randomness to your trading that cannot be analyzed and improved upon. Think about it, what's the worst thing that could happen if you stick rigidly to your pre-market analysis plan? Maybe your plan is wrong and you might lose some trades. Assuming you have your risk management under control, this shouldn't be a catastrophic problem and it should take a long time for you to blow your account. This means you should have plenty of time to analyze your trading plan and pre-market analysis over time to improve it. Figure out if you're making bad decisions or if the losses are just natural losses which occur when any trading system is out of sync with market conditions which is perfectly okay and happens to even the best traders. You can't be right every time, all the time. For example, if your pre-market analysis identifies a trend continuation possibility for the day and the markets do in fact continue in trend during the day and at the end of the day you discover you fail to capitalize on your correct pre-market analysis then you know you have a problem with execution not with analysis and planning and at least you can focus on that. You can revisit how you enter trades, what your entry criteria and exit criteria and signals are and so on. Maybe you entered too soon and you need to be more patient. Whatever the case is you can work the problem practically because you were consistent with your analysis and your plan and likewise if your pre-market analysis identifies a trend continuation possibility but the markets reverse massively and you're way off and that happens a lot. Of course you're not going to make money out of your pre-market analysis because it's just plain wrong but again now you can practically approach the problem. You can figure out what was it that led you to believe the markets would do one thing when it did the other. Just being consistent to the plan allows you to improve the plan and if the plan is not the problem then you know the problem is a technical issue with your execution the way you enter your trades or exit your trades and you can work that problem. However if you come up with a pre-market analysis plan and then during the trading session you go AWOL on that plan and basically wing it then there's not much you can do about that. You're just a bad trader even if you have a good outcome it was random and not easily reproduced because you don't have a system or a plan that you can measure, improve and build upon. At least that's how I thought through this problem when I began trading and I was struggling with these sorts of issues. I 100% can sympathize and empathize with the experience of having a plan and then getting punched in the face and then losing sight of that plan. That happened to me a lot when I started trading so I know this problem, I've been through this problem and these are the ways I thought about it and how I overcame it for myself. Just internalizing this knowledge and theory and believing the consistency in trading is of paramount importance can help you stay motivated to stick to the plan. As Friedrich Nietzsche once famously said, "He who has a why to live can bear almost any how." Now I don't want to get too deep on you guys here but if you understand why you need to stick to your plan and system in trading then you'll find a way to do it. It might take time but you will find a way. If you're doing it just because you think you should but you don't understand why it's important to do then you're much less likely to stay focused and disciplined in pursuit of your goals in trading. So with this problem or any problem in trading reflect on why pre-market analysis is important. Reflect on why being consistent with your actions in parallel with your pre-market analysis is important. Again remember if your goal is to improve as a trader you need metrics to measure and if you're inconsistent you have nothing to measure. And so reflect on how all these core pillars and building blocks form a strong base for success in trading and your self-awareness, your focus and discipline will improve dramatically overnight. Just understanding why discipline is important and consistency is important. Understanding the value of these things in your trading will improve your focus on those values. The rest is just a matter of employing systems and techniques to improve consistency and solve the problem which is a lot easier to do when you have consistent metrics to measure and build upon. As Akeel Stokes a pretty reputable forex trading coach loves to say plan your trade, trade your plan. I have a big note above my office that says trade your edge in big block letters and edge is underlined. Trade your edge. If I'm not trading my edge then I'm just gambling. I'm not a real trader. I'm not a professional and I want to be a professional trader that means trading my edge. In my case is a primarily systematic trader that means sticking to my system trading my plan as it is designed. In a day trader or discretionary traders case that means sticking to your pre-market analysis and your trading system even if it's discretionary you still need rules you still need consistent approaches and techniques that you apply to exploit your edge over the markets. So yeah I hope that helps. I hope that gives you something to think about and and inspires some other ideas on how you can go about this. I mean there's so many ways you can approach a problem like this but that's my thoughts on the matter. Understand why solving the problem is important and you'll be much more likely to commit to ways to fix it. I mean identifying the problem in the first place is half of the solution to the problem. You've already done that you are aware this is a problem now you just need to understand and believe that fixing it is important and then you just need to find techniques that work for you. Journaling is a great place to start that's where I would recommend you start. It can be as simple as a spreadsheet with every day listed out in it and just a yes or no. Do you believe that today you followed your plan as best as you could yes or no and if you have way more no's than yeses then just simply noting that and writing that down and making that real over time will help you to be more self-aware be more focused and when you are in the moment and you're breaking your rules or you're going against your pre-market plan you'll notice it more frequently and you'll be able to stop it in the moment. Building self-awareness takes time but thinking about these issues is the first step to implementing a solution. Anyway I don't want to repeat myself so I'll wrap this up here. Good luck with your trading and I'll speak with you guys in the next one. Take care.