Improving Trade Consistency
While I don't think there is a "one size fits all" approach to trading, I do think there are a lot of ways everyone here can better themselves and improve consistency. Trading should be viewed as a job and every job has strict guidelines you have to follow (sometimes even if you don't want to). For myself, I have a written list of steps that I force myself to follow. This removes any sort of emotional aspect from my trading and allows me to execute based on what I'm seeing in front of me rather than purely acting based on my own emotional bias.
This is how I view the market:
- Take consistent positions based on my account size.
20% is usually my number. ie if you have a 10k port your max position size would be 2k. I have no issue playing the same amount on each trade because the goal is to ONLY take plays I have high confidence in. If I'm not comfortable putting the same risk into each position then it's likely I'm not confident enough to even be taking the trade.
- Take consistent losses.
I almost always enter a play with an automatic -20% stop loss. I trade breakouts over short periods so if a trade doesn't immediately go my way, it doesn't make sense for me to hold it. This is especially true when taking 0DTE contracts. If you cut those earlier, you can likely buy them even cheaper when you approach your entry the second time. With breakout I think that if you're losing more than 20-30% of your position value, you just didn't enter at the right time or it didn't go your way. No sweat there, just take the smaller loss and move on and wait for your next entry.
- Formulate a plan before the market opens and STICK TO IT.
Every morning I look at the key levels SPY / SPX are ranging at and break it down to the very basics. If we go past x level go calls, if we go under x level go puts. After that you can start to layer on trends and other studies but at its very core, the stock market is all about historical levels.
- Track mistakes.
There is no point in losing all your money and not learning from it. Write those mistakes down every single time. Odds are you are making the same errors over and over. Did you enter too early / late? Did you try to chase the play? Did you not look at multiple timeframes and miss an obvious trend? Figure out what you are doing wrong and focus on improving those areas of weakness. Sometimes the market doesn't go your way, even if you did everything right but a lot of the time it is errors that can be avoided in your execution.
- Figure out what works for you.
With my current mentorship group, the whole plan was to break execution down into its simplest form. I'm a programmer so I like to think in terms of code so my trading plan looks like a checklist essentially. If we break a key level AND we have volume AND we break a trend THEN enter...etc etc. By structuring my plays this way it becomes super easy to enter and exit positions. I know exactly what I'm looking for from the beginning and I let the market come to me, rather than trying to force something that isn't there. My thinking is much clearer before the market opens rather than in the heat of the moment so it's easy to trust my TA from that time. If a ticker doesn't meet all the requirements of my checklist, I don't take the play. It can be boring but I would rather be bored than broke.