The most challenging aspect of great trading isn't knowing what to do but actually doing it. We have to relearn the same lessons many times as our discipline slips, and we make some of the same dumb decisions we have made many times in the past.
The only way to deal with this is to sit down with your boss and review your trading methodology and decisions. To become a better trader, you need a very tough boss, and that boss should be you. Great traders are never satisfied, they are constantly pushing to improve their results, and since most of us work alone, we need to develop a high level of self-reflection and self-discipline.
Many traders find it helpful to maintain a trading journal. Putting your thinking and feelings in writing as a trade develops can be extremely helpful as it forces you to address the many emotional issues that we face and are so easily ignored or overlooked. Recognizing that you failed to cut a poor position in a timely way will help you reflect on why that happened. Why didn't you do what you know you should have done? What was the thought process or lack of thought that caused the problem?
We have had an extremely tough trading environment for quite a while now, so it is a perfect time to reflect on those issues that have hurt our trading and how we will deal with them as we move into the second quarter of 2022.
There are three primary areas that I want to consider when reviewing my trading. I will never be perfect at any of these things, but what do I need to focus on the most
Discipline
In the area of discipline, the primary issue is how to take on sufficient risk to produce good returns while also preventing account drawdowns. It is a tricky balancing act and what is most frustrating about it is that great research and stock picking will not protect you in a bad market environment.
My basic trading methodology is to buy and sell incremental. I want to take advantage of volatility and be as reactive to conditions as possible. The one thing I have to focus on more than anything else is trading bigger in short-term time frames while maintaining position trades.
Everyone has different areas on which they need to focus, and it almost always boils down to discipline.
Methodology
What works best is constantly changing, and it can make a huge difference in your results to make some shifts depending on the market environment. In particular, time frames are susceptible to market conditions. Some markets are great for position trades that last weeks or months, while others are much better for day trading or short-term trades.
Are you using the proper methodology for the current conditions?
The two main issues that I discuss with traders are being more reactive and using a more incremental approach. It is much harder to do these things than it sounds, so it requires constant reflection and discipline to do it right.
Research
One of the best ways to reduce risk is to do good research. If you are not trading the best 'inventory', trading is much harder. What is your methodology for finding good stocks? Are you spending time reading quality research and studying charts and fundamentals? There is always something more that can be done, and it helps to have a systematic approach.
I find research to be one of the most enjoyable aspects of trading. It is extremely satisfying to find something with great potential at an early stage, but you have to work at research just like you have to work at managing trades.
Review your trading regularly. Traders that fail are typically those that don't reflect on what they are doing. They allow inertia to set in, and when you are holding the wrong stocks, that will cause tremendous damage.
Be a boss and make sure you do what you need to do to succeed.
"Trading" - Google News
April 02, 2022 at 09:00PM
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Are You the Boss of Your Trading? - RealMoney
"Trading" - Google News
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