How To Be a Consistent Forex Trader
Hi guys, it’s Lee here from Trading College with your free market update. Today we’re going to talk about consistency in trading because what I often get asked a lot by newish traders that are really just starting out is, how do I get more consistent in forex trading? They’re not being consistent enough and consequently the results are just too variable. Once you get consistent your account grows.
What Is Consistency in Trading?
So consistency is fundamentally about doing the same thing over and over and over again combined with developing some really good habits. By repeating those patterns, especially the most effective ones, and by making sure that those good habits soon become second nature to you, consistency is bound to follow.
I think that what was really drummed into me, from my time as a professional football player, is that consistency is the thing that the manager loves. They want to trust their players to perform well in every game. If they don’t have an excellent game, they are still playing at a level that’s consistent which still helps the team win. You are picked to play in the team every week and the manager trusts you. I’m sure it’s the same for every team sport. So being consistent is crucial really for ensuring a reliably good performance and longevity for the rest of your trading career.
How Do I Get Consistent and Start Building a Trading Strategy?
Let’s talk a little bit about how you can begin to get consistent. Now, first things first, if you’re brand new to trading, I would recommend that you first start with building one trading strategy in just one market because you don’t yet fully know what to do and you have to get familiar with the markets and this is a new skill you’re learning. A new skill is challenging at first. So, get confident in the trading strategy first and try not to overwhelm yourself with too much information, that will help you discover a consistent forex trading strategy. If you look at too many things, go to too many places, start looking at too many markets, have too many strategies then you’re going to lose confidence; you’re going to feel out of control.
As a human being, you’re just not built to look at so many things all at once so by focusing on one trade strategy you can give it your full attention. We can only really process 3-5 things at once. So let’s look at the DAX for instance, the Pro-Trading System sells and buys in this morning’s session would have made you a decent profit if you were day trading using the five minute chart. If you are just starting out, just trade in the DAX, which is one market. The Dax may not be the right market but the point is to just get familiar with one market. A good market to trade for beginners is the EURUSD because the spreads are narrow and it’s the most traded currency so there’s a lot of trading opportunities there.
Gaining Confidence in Your Trading Strategy
So once you’ve got good at trading in one market, could be the DAX or it might be an FX pair, and you’re feeling confident with using one trading strategy then you might feel like you want to add two more trading strategies. By adding another trading strategy to your trading plan this will give you more opportunities to trade in the market. More trade opportunities might mean more profits. So for instance, looking at this morning’s session, we might want to add an oversold Pro-OBS reading; as the market comes down, it’s oversold and then kicks in higher.
So alongside PTS, now you’ve got the Pro-OBS alongside it; now you’ve got two strategies in this one market which now gives you a nice toolkit to use here. More strategies may mean more profits but it’s good to have two strategies that complement each other. What could then happen is that you’re finding that you’re getting enough strategies to generate an income. So if you’ve got two or three strategies on one market then you’re going to be able to generate a really nice income with these because you’ll be doing enough trades, you’re not going to get bored (which is always the downfall for some impatient traders) and you’ll have plenty of opportunities to take advantage of; all in the one market which you have gotten to know really well.
Playing On Home Turf
So the advantage of trading just one market, like the DAX, as a day trader especially, is that you know how it moves and you know the characteristics. You know there’s a volume injection at eight o’clock in the morning in the UK and so you’re adapting to that market volatility right at that time. So now it’s midday and the doldrums are in so it’s quiet and then you’re able to go back in the afternoon for some more trading if you want to. The point here is that you’re getting to know the market and its characteristics.
So knowing the market really well and how the market individually moves is really important; and believe me, the markets can move VERY differently indeed. The FX will certainly move differently to the German DAX for instance so firstly having the strategy nailed down then building and layering on that first strategy is the best advice I can give.
Broadening Your Horizons – Understanding Trading Markets
Once you’ve got this under your belt, the next thing you can do is to start to look at other markets. So now you’ve got more strategies, or maybe you’ve got the one strategy but used in other markets. You could look at Euro/Dollar, oil, maybe gold or whatever else takes your fancy but you’re using the same strategy in other markets and we use our screeners to find the trade setups. We can turn our scanners on and they’ll give us the signals on those charts, this is instant and it saves you so much time hunting or watching the charts all day long. By using the screener/scanner you become an automated trading system yourself.
The Importance Of A Trading Checklist
Always remember to have a checklist, every time you’re thinking of making a trade, just check your checklist. Is it complying with the process regarding your strategy? Because if you’re trading randomly, if you’ve got no checklist going on; where you’re checking your emotions, checking your actions against the strategy then you’re just trading randomly and you’re not going to make any money consistently.
So having that checklist when you’re just starting out is crucial. In time, you won’t need the checklist because you’ll know the strategies inside out. But to begin with, have a checklist. A lot of our students always have checklists in front of them and they can just ask themselves “Okay, does this meet the criteria? Yes. Well then, let’s place the trade.” However, if it doesn’t, then they just move on and simply wait for the setup. It can help with the emotional side of trading and make you more consistent.
Sound The Alarm – Setting up Trading Alarms
Alarms on our charts are extremely useful. We can set alarms up on all of our indicators and you can set it so that it fires an audio alarm or it emails you a message, so these prompts can really help you to be consistent. You don’t always have to be at your trading desk.
If You Want to Know How to be Consistent in Trading – Patience Is A Virtue
Being patient is another important factor in building your consistency and, ultimately, your success. FOMO is a really big and a very real thing; where people think they’re missing out and they enter the trade too early before the signal or not fully thinking about their strategy. That’s why the checklist is such an important thing to have, guys.
But I think, when starting off as a trader, just scale it up. Start small, one strategy, the Pro-Trading System, one market; your confidence will grow dramatically and you’ll get good results. Strategy two, now you got two strategies in one market; three strategies in one market. Once you master those strategies, then you can start branching out to other markets and trade across those different areas and asset classes.
Keep A Trading Journal
Finally, and I always go back to this, the importance of journaling; make sure that you write how you traded today and what were the positives. Write down all the things that you can improve on. This could include:
- How did I trade today?
- How did I feel emotionally when I traded?
- Did I follow my checklist?
- Did I exit the trade too early?
- What could I do better tomorrow?
The list could go on and on but it’s important that you enjoy working in it.
Mindfulness and self-awareness are so important; personality profiling, which we all do here at Trading College on the mentorship program, can be very insightful.
But effectively, a lot of it is all about strategy, processing, checklists and very much consistency. Practice makes nearly perfect so make sure you practice in a demo account as much as you can.
Ok, so hopefully there’s something here that helps you with your consistency, just some of the techniques that we use here at Trading College.
All right guys, don’t forget, our Pro-Trader Program is open at the moment but we are going to close it soon. Take advantage of that, check the page Pro-Trader Program and you’ll be able to get all these systems and processes that we use here to trade the markets.
Hope this helps, speak to you soon. Take care.