“Now I spend my day trying to make myself as happy and relaxed as I can be.” – Paul Tudor Jones
Consistency is underrated. When a trader is consistent, good things start to happen.
When a trader is consistent, good things start to happen.
- The trader is more confident
- They make fewer mistakes
- They can allocate more capital to their trading.
Consistency is not a chimaera. There are steps a trader can take that bridge the gap between irregular and regular success.
Defining consistency for traders
Consistency is simply the ability to produce steady profits.
For some traders, this may be the difference between winning and losing. For others, smoothing out their performance leads to a more relaxed and happy state. For a few, the cream of the crop, it provides them with an opportunity to manage money.
Mental consistency vs. technique
Becoming consistent requires both the correct mental strategies and the right trading techniques. After all, it’s no good being all ‘Zen’ if you don’t actually know what to do, or how to do it properly.
While it is easy to say psychology should be your focus, in practice you also need a solid foundation in trading correctly.
Working on your techniques hand-in-hand with your psychology is a more effective way to develop consistency. Once you have the technique(s) you need down pat, you can then focus on achieving peak performance.
Let’s start with the low hanging fruit. That is the stuff that will make the biggest difference across the board in the shortest space of time.
Trade the right strategy for the market type
Many traders engage in the search for the Holy Grail trading strategy. That is a trading strategy that works in all market types.
Instead, it is much easier to define the market type first and then trade the appropriate strategy.
You can see here market types marked on this USDJPY Chart.
If you took the same approach in all market types, you would be pushing the proverbial uphill. If you take the right approach for the market type, you will find things click into place nicely.
Use multiple exits
The markets don’t go in a straight line to your profit target, nor do they always do what you expect them to.
This makes having multiple tools in your toolbox for managing your trades doubly important. At the very least you want to have these:
- Initial targets.
- Trailing stop.
- Trailing stop for a fast moving market.
- An exit rule for when it goes close to your profit target but starts to drop (so you don’t give back your gains).
- Exit approach for once the price hits the objective, and you think the move will continue (to capture big wins).
Adding different exit methods to your system is perhaps the easiest way to improve consistency. Don’t neglect this step.
How the big players operate: The psychology of key levels
Understanding how the big players operate, their motivation and psychology, will give you insight into why the market ranges, why it breaks out, and why key levels act as support and resistance.
With this framework to guide you, you can make smarter decisions that align you with the professionals instead of fighting against them.
You will find this leads to a much greater degree of consistency.
Four Part Video Short Course
If you want to become a more consistent trader by implementing the ideas above, you can get started with my free short course.
The course is composed of four in-depth video lessons and includes some bonus material such as a “complex exit cheat sheet” and a video on how to time an entry in bull and bear market types.
Here is a link to join the course (it’s free):
Any questions or comments, please do let me know.
(Brief note on risk management and position sizing: The “how much” you trade is responsible for your profits in the market. In order to be consistent, you need to have your position sizing and risk management rules aligned with your objectives. While this is not included in the short course (because of the depth of the topic), it will be covered in depth at a later stage.)
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.