When the market is in your favor and moving at breakneck speed, it’s tempting to ditch your trading plan to chase bigger wins. However, without steadfast discipline, those victories might be few and far between, and you might even end up squandering your gains with poor decisions.
To ensure you become consistently profitable, keep these key points in mind:
- Scaling In and Out as a Risk Management Tool
Scaling into successful positions helps curb FOMO and can maximize profits while your trade still holds potential. But remember, increasing your stake heightens the impact of price fluctuations on your profit/loss, making emotional trading decisions more tempting.
If you prioritize safeguarding your paper profits, consider scaling out or securing partial gains. After all, a $200 realized gain is far more tangible than $1,000 tied up in paper profits.
- The Value of Consistent Gains
There’s a certain allure in sharing tales of a massive 10x gain with others, but don’t lose sight that catching every market peak and valley or trading every trendy asset isn’t necessary for long-term profitability.
Instead, look at buying high and selling higher or trading less popular assets with favorable risk ratios. With diligent research and risk management, you’ll find many opportunities for steady gains.
- The Double-Edged Sword of Winning Trades
Winning trades can foster a sense of overconfidence, tempting you to cut corners and ignore the strategies that led to your success. Make your trading journal a compass for identifying habits to maintain and missteps to avoid. Ensure your trading plan reflects these insights and make sure you adhere to it.
- Trading as a Marathon, Not a Sprint
Trading demands a high level of concentration and alertness. Constantly monitoring charts and social media for opinions can exhaust you, preventing peak performance. Prioritize self-care by maintaining a healthy lifestyle with proper nutrition, rest, and exercise to avoid easy mistakes like incorrect asset symbols or position sizes.
- The Market’s Impartiality Toward Your Analysis
Confidence in your analysis doesn’t guarantee the market’s compliance. Remember, price action reflects decisions by countless traders, both big and small, who are unaware of your analysis. The market can swiftly move against you; thus, prepare by managing risks wisely and risking only what you’re comfortable losing.
- Owning Your Decisions
Success in trading requires taking responsibility for your outcomes. Acknowledge that your profit/loss stems from your strategy and execution. You might hear traders say things like:
- “I maximized a 5x move by sticking to my plan and utilizing a trailing stop.”
- “I turned minor losses into major ones because I couldn’t admit I was wrong.”
- “My gains of +30.8% evaporated because I aimed for +50% without a plan for taking profits.”
Winning isn’t just about luck, and losing isn’t solely due to outside forces. By owning your decisions, you can identify and shed harmful habits while refining your trading approach for more consistent returns.
