Trading Consistency

Consistency refers to how repeatable an action is. The number one goal for all traders who come to me for mentorship is consistency. This is a strange one because consistency in trading both exists, and it doesn’t exist at the same time.

What do I mean by this?

When we look at profitable traders, are they predictably consistent? Even the top traders will have trading sessions where they will have some losing trades. We often see traders manage several weeks without a losing trade, then lose two trades in a row.

So, if a top trader can have a series of losing trades, why should we even worry about consistency?

The fact is, even at the top-level, traders are not consistent. They are simply operating at a higher level. It amazes me when a new trader makes thousands of pounds one week and just a few hundred pounds the following week, then thinks they need to rethink their strategy or indicators as a result. The price charts show us that the markets move above and below a moving average price, constantly being bought and sold, moving up and down seemingly erratically. However, if you look at the chart longer term, you will see a definite average trend consistency is key

We can use this analogy for our own trading, understanding that we will also fluctuate between good and bad days, always around our moving average. So, having a day or week better or worse than our average is not classed as inconsistent. The goal should always be to improve the average and not change strategy every time we take a losing trade or have a losing day.

Looking at every result of every trade you place as a determinant of your skill level as a trader is the same as looking at a 1-minute chart. There is sometimes no pattern. It’s all noise and an unclear picture. But then zoom out and look at your trading over a month or a year and we start to get a clearer picture. This is what you should use to determine your success.

Many people shoot themselves in the foot looking at the short term. They obsess over instantaneous results, and end up running around like headless chickens trying to fix every problem that comes up. They often have a hundred different reasons for getting into a trade and then a hundred more reasons for why they should get out again.

If your thought patterns are inconsistent when you’re trading, how do you expect to have consistent results?

Think about it. If you are constantly changing your thoughts and your strategy, is it any wonder you are experiencing inconsistency

Where does consistency come from?

Consistency depends on a multitude of factors to support it. There is no one thing that offers us consistency and we cannot control everything (e.g. price movement). For that reason, we must be realistic.

In terms of your trading results, there can be many variables involved, so it’s no surprise it seems erratic. One day your strategy is providing you with endless trade signals and many profitable opportunities, but the next day the markets are dead in the water and you sit there frustrated because nothing has set up. You may make some great profits one day with a poor and late trade entry, then the next day enter at what you think is a great price only to be stopped out with a loss.

How well we follow our trade strategy is what we are predominantly trying to influence. There are three main parts to this.

1. Technical consistency

This is the area most new traders look to when trying to improve their consistency. The belief is that if you get a new trading system, indicator or strategy you will start to make some trading profits. The technical, no doubt, has a big influence on whether you can make consistent profits. If you bought every dip or retracement in a bull market you would enjoy some excellent profits. If you shorted every new high in a bull market, then you would have less consistent results.

2. Biological consistency

Why is it difficult to change? Sometimes being resistant to change is good – because it is consistent. What we are ideally chasing is to make our behavioural patterns consistent and better. A consistently poor pattern can sometimes make you a profit, but not as well as a consistently great one. It’s important to realise that when we try to change things, we will run up against habits that could have been embedded for a long time.

3. Mental consistency

In my experience, traders have many different trade thoughts when they’re in an open trade. Sometimes they will be trying to find reasons why they shouldn’t be in the trade. Other times, they will be thinking about the pain they felt from their previous losing trade and that they don’t want to experience that again.mental trading consistency

No wonder traders complain of inconsistency. The question is – do traders know that they trade best when they have one singular focus, simple in nature, that is maintained for the whole time they are spent in the trade?

Knowing this, why do traders crave more information? Mainly, it is short term obsession with the result. So, while they are concerned with making a profit, they are unable to let a losing trade be forgotten or let a winning trade run to get the win they need. They talk themselves out of trades and turn to the media or news for reasons why their trade was a winner or loser. This mostly happens after a losing trade. Looking externally for the answer is always the wrong path to consistency.

Typically, a trader starts trading well, making some profits, and this continues for a period. But at some point, inevitably, a losing trade happens. When the trader feels some pain they enter ‘edit mode’, their trading unravels, they tinker with their strategy, which then causes chaos to ensue. They may also get to the point that they self-sabotage so much that they give up trading. It is not only the amount of thoughts we have while in a trade, but the type of thoughts that can influence our trading consistency.

While everyone is different, and needs specific elements for their own trading, I have found that most of the consistently profitable traders trade in a neutral state or external state. If we are changing our focus a lot, we are doomed when it comes to consistent performance as a trader.

Check out our mentorship programme here

Further reading:

Benefits of being part of a trading community
The importance of trading psychology