Becoming a successful trader doesn’t just happen overnight.
But then again, it isn’t something that needs to take years either.
And look, I struggled for more than a decade before the lightswitch finally came on.
During that time, I compiled a list of 10 different ways I upped my game to become more consistent and profitable in my trading.
These aren’t difficult tasks that I’m going to lay out for you.
In fact, I can almost guarantee that anyone could accomplish all ten of these…
…I say almost because there’s always going to be that one person…you know who I’m talking about…
Let’s begin with one of the easiest out there – trade small and often.
Trade small and often
Sometimes you win and sometimes you lose. That’s the nature of trading. It’s a giant exercise in probabilities.
Just the other day I had the best chart setup fall flat on me. Rather than fly into a rage, I accepted that it’s part of the game.
For as much as any one of us thinks we know about the market, there’s always some way it finds to humble us.
That’s why the best traders don’t try to swing for the fences in just a couple of trades. They earn their stripes over a lot of them.
By trading small and often, you reduce the variance in your trading, making the results converge on your average expectations.
That sounds like a mouthful, so let me unpack that.
Let’s say that I implement a strategy that wins only 10% of the time. I risk $1 each trade to make $20.
If I start with a $50 account, I know that I’m likely to lose 9 times before I win once. However, it’s also possible I could get a series of 20 losers in a row.
However, if I keep betting the same amount over and over, eventually, I will win over time.
If I bet too much on any one trade, it can wipe me out. That’s why I want to make sure that I keep my trades small enough that I can let the averages work in my favor.
You can learn more about this topic in my article about expected value.
Decide between intraday or day to day trading
Kids can take up plenty of my attention during the day. It’s one of the joys and drawbacks of working from home.
Though, it definitely has its moments!
I also learned long ago that I was better at swing trading than at day trading
Although now, I’ve become reasonably proficient at both.
However, as the CEO of Raging Bull, and an active Angel Investor, my time is somewhat limited.
That’s why I prefer to swing trade and play option spreads.
But that’s what fits with my lifestyle. You need to choose the whether it works for you or not.
I know some folks that crave the intraday action. Others can’t stand being in front of a computer for more than a few minutes.
The point is – pick something you are comfortable with that you can continue.
Choose one setup
There are as many ways to trade the markets as stars in the sky. Just type in trading into your Google search and you’ll see what I’m talking about.
However, you don’t need a lot of setups to become a great trader.
Nathan Bear turned a $38,000 account into over $2,000,000 in two years using his TPS setup.
Find one that you’re comfortable with and at least generate a modicum of success. You want something that will keep you interested.
Realize, it doesn’t have to generate tons of trades from the outset. In fact, you want the opposite.
Just a trade or two a day will be plenty to get you working hard to sharpen your skills.
Focus on making the right decisions
This psychological trick works wonders. As I mentioned before, trading is an exercise in probabilities. Sometimes, you can hit losing streaks or hit a hot one.
Money comes afterward. The first thing you need to do is make the right decisions.
If you have a good setup, solid risk management, and repeatability, then the money will come.
Create a 90-day plan
As I said before, becoming a successful trader doesn’t just happen overnight. Even when you do turn that corner, it’s a constant battle to keep it going.
That’s why I like to create 90-day plans to keep me on track.
These help me work on my fundamentals, learn new skills, develop and nurture habits and routines, as well as give me milestones to measure against.
When starting out, keep the plans simple. Never make them more complicated or onerous than you can handle. These should be realistic and achievable.
Honestly journal your trades
I can’t tell you how important it is to write down your trades.
Most traders start this in earnest. Eventually, they only write down the ones they like, skipping a few here and there. Soon, they can’t figure out why their account balance doesn’t match their journal.
Your trade journal should contain enough information for you to analyze and assess your weaknesses and opportunities. At a minimum, you should be able to calculate a win-rate and a general risk/reward ratio.
Tweak your risk/reward and win-rate
Speaking of risk/reward and win-rates, once you’ve established them, it’s time to start tweaking them ever so slightly.
You might assume that if you set wider stops or tighter targets that your win-rate will go up. Generally, that is true.
However, it isn’t always a 1 to 1 relationship.
That’s why you want to break it down and really understand where the sweet spot is. Sometimes, you can tighten up your stop loss without sacrificing win-rate.
To me, that’s something I want to know and incorporate immediately.
Fix one small piece at a time
Trading is a lot like sports. You can’t work on everything at once. Otherwise, you just flop.
Instead, take things piece by piece. When you find an area of weakness, break it down into the smallest components and work on those.
Not only is this proven in the business world and psychologically to work better for most people, but it can also give you a greater sense of accomplishment.
Create routines
Humans are creatures of habit. Routines help us stay on track and remain focused.
Every weekend and before each trading day, I go through the same steps to evaluate the markets, my current trades, and my plan.
One of the best parts of routines is the efficiencies they create. By doing the same things over and over, you become better at looking through the charts and making decisions. That means less uncertainty when it’s time to act.
Find a mentor
Last, but certainly not least – find a mentor.
Learning from someone who’s already been through the wringer can cut your learning curve and save you both time and money.
You want to have someone that you connect with and helps you understand your trading and the markets. They should speak to strategies that resonate with you and help you improve.
That’s the entire goal behind Total Alpha.
I created a well-rounded service to not just educate traders, but provide them an array of trading styles and choices to suit their needs.
But before you jump into the ocean, why not test the waters?
Join me for my upcoming Options Masterclass where you’ll learn some of my favorite techniques for analyzing and trading stocks and options.
