Many traders in the market tries to catch the one big move which brings overnight success to them. However this may double or triple your trading capital, can give you the instant adrenaline rush or dopamine release. But ultimately if you stay in the market, in the end you are gonna lose all your profits. Because one big win may give you profits but it can’t give you understanding about the markets, and understanding comes when you stay consistent in the market. Meanwhile success in trading isn’t built on the one big trade, but is built on the continue showing the discipline, patience and consistency in the market.
A trader who continues to show their consistency, patience discipline to the market, performs better than anyone else.
The Misconception About Big Winning Trades
Traders believe that catching the one big move will unlock the continue to profits in my trading career. Meanwhile catching these types of trades often builds ego and unrealistic expectations from the markets.
Constant Trading: When you make the massive returns by catching the one big move. Then Ultimately you start taking the trades frequently because you don’t settle for the less than the previous one and every time you won’t be fortunate enough to capture the entire move.
Excessive Risk: In the hope of capturing the big move, traders often increase the risk or lot sizing for the big profits.
Emotions Take Over: In the strong urge of catching the big move, traders trade with the emotions like fomo trading, overtrading or revenge trading etc.
Weaken The Discipline: While looking to catch the big move, traders often trades at the random levels. As a result it weakens the discipline by continue trading until traders the catches big move.
Instead of chasing the big moves, focus on following process that’s what requires in the success of trading.
What Consistency Means in Trading
Consistency states that following the same process everyday, which includes the trading plan, risk management trading setups etc across all the market conditions. A disciplined trader always focuses on the principle of their strategies like entry confirmation type fixed position sizing rather than breaking the rules for short-term profits.
Pillars Of Consistency In Trading
Process Over Money: Meany beginner traders thinks that constant trading, catching big moves, making big profits every day or week is the consistency. But process over money involves trading with the same rules over and over again instead of thinking about the result. It involves repeating the same process every day.
Clear Risk Management: A disciplined trader always trade within their risk management, they never cross their risk limits. It involves that always follow the fixed risk on the every single trade like 1-2% with respecting stop loss across all the market conditions.
Consistency Over Emotional Decision: When the markets are highly volatile, may force you to trade out of fear, fomo greed and etc. Consistency demands control over the emotional decision making, which means doesn’t matter what was the result of my 3-5 past trade, i’ll still follow my trading rules and won’t enter in the trade until my rules asks me to enter.
Realistic Expectations: Set the realistic expectations from the market. Because the market changes daily, it doesn’t move in the single line. Like market is trendy the it can give 100-150 pips but when it isn’t then it can reverse after giving 50-60 pips in your favour. Always ensure that when you are winning, you must be winning more and when you are losing, you should lose 1/4 of the last profit. Like on the every 25 pips of risk you should aim for at least 75 pips or more than that. So even if your win rate would be 50% ultimately you will end in the profits.
Why Consistent Traders Survive Longer
Because consistent traders treat trading like a business rather than a easiest way of generating the quick profits.
Why Consistent Traders Survive
The Problem With Chasing Big Wins
Catching one big move or chasing big win may give you confidence but it also brings ego, greed which often leads to breaking the trading rules, avoiding the risk management. Which confirms the increasing in the lot or position sizing or trading at random levels etc.
Avoid Loss Aversions: Rather than fixing the risk on the every trade, they start putting the stop loss at the uncertain places or sometimes even they trade without putting the stop loss.
Subpar Setup: Most of the time big move or sudden spikes in the market doesn’t require any setup. So what beginner traders do when they see a big candle towards any side, they instantly enter in the trade without spotting or waiting for the high probability setup.
Intuitive decisions: When traders trade out of the fear, fomo, greed and all, this falls under the intuitive decision category. Where all the decision are based on gut feeling, impulsive choices and Visceral judgments. When a trader chases big moves or win they often trader with the emotions instead of making the logical decisions.
Consistency Builds Confidence
Chasing big moves or sudden spike can’t give you the confidence which needs to survive in the market. Executing the same process, trading at the same setup, following the same rules and routines every day. Removing the emotional resilience and giving your edge enough time to play out in the market.
Method Over Result: Without thinking about the outcome of the single trade, adhering to an established method everyday. Fixing the loss percentage, pre-defined entry signals establish the strong confidence foundation.
Iteration: Confidence is achieved by mastering same process everyday. When you trade with the same setups, same entry signals, this gives confidence to the mind to start trusting the process without out the outcome based results.
Risk Assessment: Confidence is based on the fixing the loss on every trade. Newcomer traders often increases risk after the one big win or lose which weaken their confidence. Sticking to the fixed risk management will protect you capital and your confidence too.
Why Small Gains Add Up Over Time
Small and consistent profits may take time but it will compound in months or years. By risking some of amount profits in order to make the small and steady gains leads to grow your trading capital, gradually increase in the lot sizing. This unhurriedly disciplined approach to the markets will make you survive in the markets.
How Traders Can Improve Consistency
Traders may improve steadiness by following the rule of unavoidable risk management, trade on the strategy with the backtested results and journal every trade to avoid emotions and the mistakes during the trade.
Enact Aggressive Loss Prevention: Consistency improvisation requires the fixation of the loss. Like 2% risk on the every trade or 3%. Meanwhile it should not look like this on a one trade you risked 2% and on the next trade you risked 5% then it can destroy you trading capital and could dent your psychology and discipline.
Rule-Based Execution: Allowing your emotions to drive your decisions may develop the inconsistency. Treat trading as the structure driven process. Always conduct the pre market analysis, this will help you to identify the high probability setups and pre-defined entry and exits.
Document Your Trades: Tracking your trade will keep you aware what brings you target price and what leads to the stop loss.
Conclusion
Big profits may excite for a while, it won’t develop the long term survival skills. Where as small and steady profits will give long lasting confidence and improve consistency.
The market creates opportunity every day and every hour, but it requires consistency in the market.
Success in trading often comes with the disciplined approach to the markets and consistently execution in the markets.
You can check out my previous blog, if you want to know Why Staying Away From the Markets is necessary