Trading comes with its advantages and disadvantages. While many traders have been successful, some end up in frustrations and losses. Trading consistently, no doubt, can be a struggle for both beginners and intermediate traders.
Stock Trading of course can be mentally challenging considering it’s either a game of gain or loss. Not to forget that it’s the same routine over and over again. Making analysis, keeping up with the market trends, tracking the same signals, this no doubt can be very boring.
Most beginners find themselves frustrated and almost giving up before attaining success in the market world. But as they say “slow and steady wins the race”. With a well-planned strategy, coupled with consistency, success is sure.
To be on the right track and to avoid common pitfalls, below are some of the tips to follow while trading:
How to improve consistency in trading? 5 Tips to Follow
A consistent routine brings consistent results in trading. Some traders go the other way by seeking a consistent result before knowing the strategies. This is very wrong and can eventually lead to great loss. With the guidelines below, our way of approach to trading can be improved.
Your style of approach matters a lot in trading and it shouldn’t be complicated. A trading style has to be chosen. There are lots of trading options which are scalping, day trading, swing trading, and long-term trading among others. The difference between these styles of trading is their timeframe.
For scalping, opportunities are opened within 1-15 minutes. Day trading indicates that all trading must be closed before the end of the day. While swing trading, positions are opened for days/weeks and long-term trading lasts for several months.
The next step is to decide on your trading strategies, and this depends on your preference. The same goes for Bollinger bands, moving averages, or some other form of technical indicators. Some might prefer economic news or other fundamentals.
It’s advised to test the strategies by doing back testing. This can help you identify failures in the past. Also, real-time testing with demo-trading accounts can be used. With the strategies above, traders can maintain consistent based trading.
2. Set risk management
It’s not always automatic to win more than 50% of trade. Therefore, the best way to deal with this is to set your risk management. The way risk is managed can either make you bankrupt or help you stand against harmful market waves.
As a good trader, you should be able to know the amount of risk you can manage in each exchange. Watch out for realistic exit points and be quick to cut your losses. Also, avoid going overboard i.e., going beyond what you can bear. With this, you can deal with risk and prevent losses.
If you have weaknesses in risk management, don’t bother going into trading because it’s very risky. To know how to manage risk well, seek proper training and gain more experience.
3. Profit targets
Setting your risk management is not enough to build a consistent profit in trading. When a realistic profit target is also set, it can be of great benefit.
To achieve this, currency pairs like GBP/AUD or GBP/NZD can be used, because their daily fluctuations range is between 190 – 210 pips. Compared to EUR/CHF, that sometimes moves by 50-55pips.
4. Keep records
Tracking your progress helps your consistency in trading. Keeping your track records helps you measure your average monthly earnings or losses. You can also calculate your winning and losing ratio trades. This will help you to plan and build a good trading strategy.
When a trading journal is kept, it can also be a source of motivation. Since track records help you record your loss and gains, this helps you identify your mistakes and setbacks. With this, you can see if your monthly earnings are getting better or not.
5. Regular research
Keep your stock market basics clear and updated. To stay on top of the current economic trend, your research skills should be on top of the game. This might be a bit difficult, as getting accustomed to different currencies updates can be overwhelming.
You can always start by studying currencies. This can be FOREX majors, Consumer Price Index (CPI), Gross Domestic Product (GPD), unemployment rate, and rates decisions.
When it comes to trading, consistency is the key. With these tips in mind, a lot can be achieved. It takes a disciplined and determined mind to follow these strategies unapologetically.