Becoming a Better Trader – Fixing Mistakes, Working on Weaknesses
Small fixes can add up to big change
This may sound obvious, but this is an overlooked area of trader development – identifying weaknesses and turning them into strengths. It’s one of the reasons many trading mistakes are made over and over and over again. Even fixing the little stuff, making tweaks here and there can add to up to a big difference. Fixing a mistake in one area can help remedy a problem in another, and so on, it’s a process.
Whether you are a new trader building a foundation or an experienced trader struggling (happens to the best), here are 4 ideas to help you Build Confidence in Trading
It starts with keeping good records, journaling, and review
Without good records it is very difficult to pin-point problems let alone fix them. Going through your trade history can help you quickly see what you need to work on. For example, you can calculate risk/reward ratios, or see that you make money specific types of trades but lose on others.
In addition to looking at your trade history, a journal will help in identifying behavioral patterns which may need fixing. These are the hardest to remedy, but you can’t begin to address them if not brought fully into the light. The process of review should be done periodically, even if only once a week it can go a long way towards making progress.
We understand the difficulties of trading, which is why we’ve put together a variety of guides designed to help traders of all experience levels.
Take it slow and don’t overwhelm yourself
This will depend on your experience level, but you likely have several areas which need work. And that is OK. The key here is that you take it one step at a time and go slow. By trying to tackle all your issues at once you will become overwhelmed and frustrated.
Start with the most important. These are typically problems related to risk management. A topic we discuss weekly, for more check out this webinar dedicated to risk management. While talking about risk, another point to make is that some problems cross over into other facets of your trading, and so fixing one problem helps fix another.
For example, by trading within your personal risk tolerance you will avoid both larger drawdowns and find it easier to stick to predetermined stop losses and targets.
Be patient with your progress
There will be setbacks. Trader development is a process and can be a frustrating journey if not handled properly. So, don’t go hard on yourself if it takes longer than you like or think it should. Just be persistent and take it slow. If you find that along the way you start to slip and regress, take a step back, and, if needed, take a little time off to regain perspective.
It’s our competitive nature to want to push on through difficulties, but often times the best approach is to stop struggling and further tangling ourselves up in a mess. The problems and their solutions are more likely to appear when not trying too hard.
For the full conversation and examples, please see the video above…
Enjoy the video? Join Paul or any of the team’s analysts live each week for webinars covering analysis, fundamental events, and education.
Past webinars you might be interested in: Handling Drawdowns; Risk Management; Analysis, keeping it simple; 6 Mistakes Traders Make; Focusing on the Process; Building Consistency; Classic Chart Patterns, Part I; Classic Chart Patterns, Part II; Trading Breakouts; Trading Pullbacks; Combining Breakouts & Pullbacks
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.