Make Trading Your Business
Wednesday, May 23, 2018
In order to succeed as a professional trader, whether a trainee or seasoned pro, trading is a business venture and should be treated as such. In short this means that you should take it seriously. Turn up on time, plan your day, be diligent in your analysis, carry out trades with as much precision and conscientious effort as you can bring to the task and record your successes and your losses in a trade journal daily so that you might learn from your experiences and reactions to both wins and losses.
There are many training plan templates to be found online. Find one that fits your style and fill it out as completely as you can. Once complete, a strong trading plan sets out the road map between where you currently stand and your desired destination. That destination should be SMART (Specific, Measurable, Agreed, Realistic and Timed). For this reason it is a good idea to start with something akin to: “I will have accumulated €100,000 in trading profits within 18 months”. This short statement is clearly Specific, Measurable and Timed. Whether it is a realistic depends on a judgement of your skills and any track record you can use because past performance while not being a guarantee of future success can be a strong indicator.
The fact that the goal should be Agreed is an interesting tenet in this context because traders are often self-directed, work-from-home, autonomous individuals. However one of the key factors in trading success is accountability. Having the filter of someone else's mind for your thoughts and frustrations can be the difference between a wasted skillset and a consistently profitable trading period. Therefore if you have a mentor, a sidekick or in the case of a pro trader, a diligent risk desk, the accountability factor climbs in the right direction. Agreement on the trading target makes you accountable to someone outside of yourself and that motivation can bring focus in times of chaos or doubt.
Next you should break that SMART goal down into smaller, shorter-term targets. In trading, with something as readily-observable as P&L, these targets can be on a per-trade basis, or more realistically on a daily basis. Some rules of thumb such as:
- I will never lose more than $250 in any one day
- I will stop trading the session after three consecutive losing trades
- I will make $250 daily average this week
The TraderDock Team