Consistency is all about how often you can repeat an intended action and it’s pretty obvious why that’s such a desirable skill in so many different walks of life. If you’re a consistent chef then you’re going to have very happy and returning customers. If you’re a consistent bricklayer, that wall is going nowhere. It’s rock solid. In fact, to quote Dwayne ‘the Rock’ Johnson, “Success isn’t always about greatness. It’s about consistency. Consistent hard work leads to success. Greatness will come.” Experts aren’t just successful once, they’re repeatedly successful, and that applies to everything from music to sports, from art to accounting.
When traders talk about improving the consistency of their trades, they mean that they want to put in place a pattern of behaviour to generate regular and steady profits from their actions in the markets. The number one goal for all the students who come to us for Mentorship is consistency and this is made so much stranger by the fact that consistency in trading both exists and doesn’t exist simultaneously…
Allow Me To Explain
When we look at the most profitable traders, can you predict their consistent success? Even the world’s top traders and fund managers will have trading sessions where they will lose money trading. We often see our student traders go for several weeks without losing a single trade and then make two losing trades back-to-back.
You might be thinking if even the best traders still lose then why should I bother trying to become more consistent. Well, the truth is that that even though the brainiest financial whizz kids are not 100 percent consistent they are still operating at a higher level. We still find it amazing when a student makes thousands of pounds profit in one week, then scrapes by with a couple of hundred the next and all of a sudden wants to rethink their strategies, change all their indicators and start from scratch. The price charts demonstrate every day that the markets fluctuate above and below a moving average price; forever being bought and sold, moving up and down seemingly at random. However, if you look at the chart longer term, you will see a definite average trend higher.
We can apply pattern to our own trading. It is important to understand that you will also move from good to bad, from up to down, but you will always be around your own personal moving average. Being consistent does not mean you won’t have bad days or even weeks. It is about sticking to your strategy and continually improving your average.
Some people cause themselves unnecessary pain by viewing every trade as the mark of success or failure to them as a trader, seemingly unaware of how fleeting that sense of self is. “Oh, I was definitely a good trader last week when I had 10 profitable trades in a row, but this week I’ve had two flops on the bounce and I feel rubbish.”
Looking at your trades this way is extremely shortsighted, you need to take a step back. Imagine you’re looking at a 1-minute chart; often there is no pattern, just blur green and red. But then you move the timeframe and start looking at the bigger picture and there’s all sorts of trends and patterns staring back at you. Zoom out and look at your trading throughout the month (or even over the year) and you’ll soon see a much clearer picture; you’ll see your success average trend higher.
This is the true indicator of a successful trader.
Like shuffling forward looking only at your feet, many students also trip themselves up looking obsessively at the short term. I suppose it’s the way of the world at the moment but a lot of people out there expect instantaneous results and give up far too quick following a setback. When you ask them why they made that trade they often have a dozen different reasons why and then another twelve for why they should get out of it right away.
Inconsistent thought patterns will cause you to have inconsistent trades. If you are constantly changing your mind about things and your strategy then is it any wonder why you aren’t able to replicate your success?
How To Get More Consistency In Your Trades
No one single thing can guarantee absolute consistency, instead it depends on a variety of supporting factors. For instance, we cannot control things such as price movement, how a global pandemic or a trade war would impact upon different markets and companies so we must be realistic; and those are just the big impact factors. In trading there are a multitude of micro-variables that will impact on trader behaviour (and consequently the markets) so it’s no surprise it can often seem quite erratic.
One day your strategy could be providing you with a plethora of trade signals and almost too many profitable opportunities to take advantage of. The next day however the markets are stagnant and you idly sit there at your screens drumming your fingers through boredom because nothing has set up. One day an unwise and poorly timed trade can surprise you with a big profit and then the next day you enter at what seemingly was a great price only to be stopped out with a loss.
No trade no matter the signals is a sure-fire success. However, your overall success as a trader intrinsically tied to how well you follow your trade strategy and being consistent in your approach is very much in your own hands. This strategic consistency can be broken up into three main areas:
1. Technical Consistency
This is the first area most new traders explore when trying to improve their consistency. This is the belief that if you adopt a new trading system, a new indicator or a new trading strategy you will instantly start to make some trading profits. The technical aspect is no doubt important as it does have a big influence on whether you can make consistent profits. If you bought every dip or retracement in a bull market you would likely enjoy some excellent profits however if you shorted every new high in a bull market then it would yield far less consistent results.
2. Biological Consistency
Bad habits are so easy to make and so hard to break. Patterns of behaviour are very difficult to change. Sometimes being resistant to change can be good (because, overall, you’re still consistent) but what we are ideally trying to do is to make our behaviour patterns both positive and consistent. A consistently poor pattern can occasionally make you just enough profit to trick you into repeating it, hoping for better, but it will not be as profitable as a consistently great one. It’s crucial to understand that when we try to change anything we do, we will run up against habits that are deeply ingrained and easy to fall back into. Even if you choose a new technique, these unhealthy patterns of behaviour can still cause your trades to come unstuck.
3. Mental Consistency
Your average person’s mood, thoughts and feelings change dramatically throughout the day, week and year. Sometimes you feel confident and the sun is shining, sometimes it’s miserable outside and you’re feeling low; sometimes these events are linked and sometimes not. When traders are in an open trade they will often have many different thoughts running through their head about that trade. Some of these are telling them they’ve made a mistake and they need to get out of it straight away. Some are memories of their previous losing trade and the pain they want to avoid whilst others are of that last winning trade and how good they felt afterwards.
It is important to know that traders trade best when they are focused on sticking to their chosen strategy and resist these impulses to stray from that path.
So why do traders want more information? Usually, it’s that they are overly obsessed with the short-term results. They are unable to let a losing trade be forgotten or let a winning trade run its course to get the win they need. They talk themselves out of trades or exit trades early and then turn to online sources or the news for reasons why their trade was a winner or a loser (though usually this happens after a losing trade). Looking externally for the answer is always the wrong choice when looking to build consistency.
Typically, a trader starts trading well, building some profits, but sooner or later a takes a losing trade. They then enter ‘edit mode’, start tinkering with, what was largely, a winning strategy and chaos ensues. This act of self-sabotage can be so much that they even decide to give up trading altogether. The consistently profitable traders trade in a neutral state; riding the highs and the lows with an equanimous mindset and deeply trusting a strategy that wins more frequently than it loses.
If your trades are being impacted by the time of day, your temperament, the weather, personal issues or your last trade then you won’t be following your strategy as intended. If you change your focus then you will not be able to consistently perform with success as a trader.
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