Stick to one method/ strategy
Some time ago I did a poll amongst professional (profitable) Forex traders. One of the questions I asked was: “ Were you someone who has traded practically every forex strategy, system and EA in existence… yet still found yourself losing money hand over fist? “. The answer was invariably “Yes”. If that sounded familiar then I can tell you one thing: You would definitely not be alone. Most traders of all abilities have been there.
But what might shock you is that it may not the strategy letting you down – it may simply be you. You see, some strategies work some of the time, other strategies work most of the time…but no strategy out there works the whole time. The ability to sit through any strategy’s drawdown period will make or break any newcomer to the market in their journey to becoming consistently profitable.
From my own experience of mentoring aspiring Forex traders, sadly I have to agree with this statistic. I also figured out that one of the major issues novice traders were facing is not being able to stick to one trading strategy. The temptation of trying the ‘new thing’ in the hope that it will be the road to success is always there.
This temptation even got a name: the Shiny object syndrome. It reflects the tendency for someone to get distracted by new thoughts and ideas, their own and others, and never focus or complete anything. Definition being given, how do you avoid falling into the shiny object trap?
Some believe that staying focused (i.e. the ability to stick to one trading strategy) is something that just happens. I’m not thinking in the same way. In fact, I believe that there are essential things you can do to increase your chances of staying focused.
Don’t try to be a master of all trades and try to stick to one system and asset. Firstly set yourself up as a swing trader or a day trader or a scalper and stick to this. Secondly stick to your trading plan at all times. No strategy actually wins and prints money all the time. Therefore your trading plan should consist of different strategies, each of them related to a certain price action. Run this for a while and analyze how your performance is. More importantly be patient and disciplined and stick it out for a long period of time.
A global Forex trading plan is only effective if it’s followed. It sounds simple to do. It is really just common sense but most traders still can’t do it. A trading plan should be a personalized plan for you, a plan that fits your goals, risk tolerances and individual lifestyle. Moreover your trading plan must be based on reality, not hope.
However many forex traders give up on their trading plan, or often more specifically, the trading system in their plan. Why? Because they are unable to endure a string of losses. Rather than sticking it out through the inevitable rough times, they give up. All this takes patience and discipline.
If you want to be truly successful, invest in yourself to get the knowledge you need to find your unique factor. When you find it and focus on it and persevere your success will blossom.