Thursday, August 14, 2008

Achieving Consistency

Every trader should strive to be consistent. But what does consistent really mean, earning X amount of dollars every month? I think it is unrealistic to think you can make a certain amount of money each month, and dangerous to set this kind of goal. The market can be inconsistent and fluctuates between trending and choppy. There are some months that will offer more opportunity for your particular style of trading. I think a better goal is to aim for a certain win ratio, or expectancy. This is where discipline comes in, because you shouldn't be trading when the market conditions are not ideal for your trading style. So on those months where there is less opportunity, you can still have x percentage of winning trades, but on less trades, by being more selective.

It's simple really, but the two keys to consistent trading in my opinion are:

1. Only trading the best setups.

2. Only trading when the market conditions are favorable.

No comments: