Sunday, July 05, 2020

How To Build Your Trading Consistency

Above you can see a recent reading from my glucose meter.  As a person with Type II diabetes, controlling my blood sugar is important to my health.  To achieve that control, I wear a sensor on my upper arm that provides real time blood sugar readings to the meter shown above.  In the beginning, wearing the sensor and using the meter, my readings were all over the place.

By taking readings frequently through the day, I gradually learned the times of day when my blood sugar tends to be highest and lowest, how foods and exercise influence my readings, and how much medication to take to stay in my target zone.  This took a lot of trial and error.  I made many mistakes with what/when I ate and many mistakes with medications in order to learn what works.  The recent meter reading shown above illustrates what is possible when we measure outcomes continually and make small, targeted improvements with frequent feedback.  

Some people with diabetes jump from diet to diet and medication to medication and never make these improvements.  They look for big changes to their readings, and so they fail to make smaller, steadier improvements.

It's the same with trading.  The successful traders try lots of things, make lots of mistakes, get daily feedback, and then make very specific, targeted improvements in what they trade, when they enter, when they add size or scale out of positions, when they stop out, etc.  Every trade gives them a "meter reading" and they learn what works and what doesn't.  Other traders look for big changes to their trading and jump from "setup" to "setup", one style of trading to another, one time frame to another.  There is nothing cumulative to their experience, and their results show that.

We can't build a building jumping from one set of blueprints to another.  Ultimately we have to decide on our structure and lay the foundation brick by brick, gaining relevant experience as we go along.  The consistency of our trading will never exceed the consistency of our learning processes.

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