The Power Of Consistency In Professional Trading

A fighter pilot has a highly skilled job that to most of us seems very sophisticated, and rightly so. However, to the man or woman flying the plane, it’s nothing more than a routine that they have executed hundreds, probably thousands of times. This also applies to surgeons or any other highly-skilled job that seems extremely difficult, if not impossible to the rest of us. This leads me to my next point; to the outside observer, a professional trader might seem like a very highly-skilled individual who does something that they (outside observer) would have no clue how to do. What do all three of these people have in common?

The answer: Consistency.

Most of you know that is Arnold Schwarzenegger in the picture to the right, Arnold personifies the fact that consistency pays off physically, mentally and financially.

You’ve probably read about habits and how they are the “key” to success in trading and virtually everything else in life. However, I’m willing to bet you’ve found less information on HOW to go about obtaining these all-powerful habits. In today’s lesson, I’m going to give you a brief overview of the power of effective trading habits and then get into EXACTLY HOW TO OBTAIN THEM so that you can get on the track to profitable trading NOW.

Growing a trading account is like growing muscle

Consistently going to the gym, and that means going even when you really don’t feel like going, will result in you being in better physical and mental shape. Consistently eating healthy foods will also result in you becoming a healthier person, both physically and mentally. For someone who is out of shape and has poor exercise and eating habits, it might be very difficult and uncomfortable for them to start consistently eating right and exercising…because they already have the very negative habit of being lazy and eating unhealthy junk food. However, for the healthy person, they actually ENJOY exercising and eating right because they have done it so consistently over a period of time that it has become a habitual part of their daily life and indeed even a part of who they are.

Similarly, if you consistently wake up early for your job or for school, you know that soon it becomes a habit. Conversely, if you consistently stay up late at night, you know that also becomes a habit eventually, and one that makes waking up early the next day extremely difficult. Generally speaking, going to bed early and waking up early makes you more productive, so clearly we can use the power of consistency to our advantage to develop the powerful habit of getting enough sleep and having more productive days, all by going to bed at a consistent time each night.

Consistently learning and education yourself turns you into a more knowledgeable person who will probably make more money and be more successful than the person who chooses not to consistently educate themselves.

My point is simply this: Consistency in all aspects of our personal and professional lives ultimately ends up building habits, and habits are really what define each of us, aren’t they? To paraphrase one of my favorite all-time motivational speakers Napoleon Hill, “We are what we think about and do”. Whatever you consistently think about and do will become a habit, you have the power to decide if you form positive or negative habits by what you consistently think about and do. If you consistently smoke cigarettes you’re probably going to develop a smoking habit, which is obviously a very bad habit to develop. If you consistently manage your risk correctly in the market and stick to your trading strategy and do not over-trade, you are going to develop some very positive and powerful trading habits that are going to result in you becoming a successful trader.

ANYTHING is possible through THE POWER OF CONSISTENCY.

Consistency builds habit

As author and business strategist Eric V. Holtzclaw said in his article titled Power of Consistency: 5 Rules:

“Until you have tried something new for a period of time and in a consistent manner, you can’t decide if it works or not. How do you measure effectiveness if what you are measuring isn’t performed consistently? I typically give new initiatives, processes, and organizational structures at least six months before judging them a success or failure. It’s often minor tweaking instead of major overhauls that make the difference.”

• Consistency in sticking to an effective trading method like price action, helps you master your trading strategy and gives you a real chance to see if your trading strategy is truly worth using or not. Switching between methods or trading when your edge is not truly present hurts your trading results over the long-run. How do you know if a trading strategy works if you don’t stick to it and give it enough time to play out? Give it at least six months of CONSISTENCY as Eric Holtzclaw said in the Inc. com article I referenced above. If you cannot muster the discipline and mental fortitude to follow a proven strategy like price action for at least 6 months consistently, you will have a hard time finding any success in the market.

• Consistency in risk management is key….keeping your dollar risk per trade consistent, is something that allows you to both keep your losses under control as well as your emotions. Traders who vary their risk a lot from trade to trade inevitably end up on an emotional roller coaster of trading that typically results in them giving back all their trading profits and blowing out their accounts. Keeping your risk consistent after a big winner or big loser is key and might be thee single most important difference between amateur and pro traders.

• Consistently tracking your trades and keeping a trading journal is something that you definitely need to do to develop effective trading habits. In last week’s article, Find Your Forex Trading Mojo, I discussed the story of an LTTTM member who was having a difficult time keeping his trading profits after building up his account a decent amount. I helped get him back on track by stressing the importance of journaling his trades and tracking every winner, loser and breakeven trade. This doesn’t take a long time, but it is a little “tedious” and is perhaps the most “work-like” thing you’ll have to do as a trader. Unfortunately, many traders don’t keep a track record of their trades and it results in them getting off track and losing their discipline and never developing the trading habits they need to succeed in the markets.

To quote Eric V. Holtzclaw again from the article Power of Consistency: 5 Rules:

“Business growth requires a track record of success. You can’t establish a track record if you are constantly shifting gears or trying new tactics. Many efforts fail before they get to the finish line, but not because the tactic was flawed or goals weren’t clear. The problem is often that the team simply didn’t stay the course to achieve the objective.”

Consistency is the catalyst of trading success

A fighter pilot started out learning how to fly probably in a classroom, then moved to a computer simulator of some sort and finally, after probably years of training and education, began practicing his or her craft by flying in a real fighter jet.

Similarly, surgeons begin mastering their craft by first obtaining education / training and then they might practice on cadavers in the lab or shadow a mentor in a real lab setting, and then finally after years of practice they are ready to operate on a patient by themselves.

A professional trader will take a similar course (or at least they should); training and education, practice (demo trading) and then once they are ready, which will be a different amount of time for everyone but usually takes a period of years, they will begin making a living as a trader.

The “fuel” or the “catalyst” that allows all three of the above individuals to excel in each of these three very different careers, is consistency. Without consistency there is no success in trading, flying fighter jets, becoming a surgeon, or anything else in life. Indeed, even if you are working at Mcdonald’s (not belittling anyone who does work there), you are going to get fired if you do not show up to work consistently on time.

The ‘formula’ for trading success

Finally, I will end today’s lesson with a very simple formula for you:

Consistency = Habit = Results

If you consistently trade according to your strategy (don’t over-trade), consistently manage your risk properly and consistently maintain your composure after every trade, winner or loser, you will give yourself the best possible chance of making consistent money in the market. However, if you choose to behave erratically by straying from your strategy (over-trading), risking too much and generally gambling your money in the market, you will develop account-destroying trading habits. Most traders lose money as a result of having very inconsistent trading routines and never following through with their trading strategy or risk management plan.

The good news is that YOU have the power to control what you do and what you focus on. You have the power to decide if you want to keep behaving inconsistently in the market, or you can decide to try and harness the power of consistency and use it to develop profitable trading habits. Consistently trading an effective trading method with discipline, like the price action method I teach in my forex trading course, will eventually turn into proper trading habits which will then turn into making money consistently in the markets. There are no “short-cuts”…this IS how it’s done.