If you’re desperate to improve your trading because you lose constantly, change systems frequently, or are just too damn scared to pull the trigger, this article is here to help.
At Tradeneophytes.com, my goal is to argue for the simplification of trading, and by doing so, a beginner can quicken the learning curve.
In the same way, new drivers are most likely to crash, new traders, are most likely to dig themselves into a trading hole.
Or worse still, actually cause themselves psychological trauma, that affects all future trading endeavours.
This trading thing ain’t no joke. If you set off on the wrong path, you’re opening yourself up to all sorts of problems.
I’ve been there, spent years as a very bad trader. It’s no fun at all.
I was either, stupid enough, stubborn enough, or merely had deep enough pockets to ride it out.
Most are not so lucky though.
They tangle themselves into such ridiculous trading knots they never make the grade.
What I have learned most is that in trading, simplicity rules.
When you simplify, you’ve got the clarity of mind.
Trading in the zone or entering the flow state become that much easier.
Improve your trading with five simple hacks
I don’t know your trading problems or how to solve them.
I do know how I overcame my own. And I don’t think you’re all that different than me.
So below are my five top hacks that improved my own trading.
At first slowly and then very quickly.
If your trading is not working out, the chances of just one day turning it around are slim to none.
Or, that is how I used to think.
The following five suggestions, I implemented over years, so results were slow to improve.
You are lucky.
You can make all those changes at once.
The question is, will you?
There’s so much resistance from losing traders to avoid doing the right thing.
You’ve developed sloppy trading habits, and are unwilling to let them go.
But let them go you must – to be a profitable trader.
So let’s begin.
Chart your equity curve
All traders know they should keep a journal. I won’t waste your time telling you to do that.
When I was losing I never kept one.
It’s only when I started having a few wins behind me I would once again open up that notebook, Excel spreadsheet, or whatever I was using at the time.
Losing traders don’t want to see all their failures staring them in the face.
So I’m not going to be a hypocrite and tell you to do something I didn’t do very much myself.
What I did, that helped me on the slow road to constant profitability was to plot my equity curve.
I’d get out a piece of graph paper and pencil and each night, before bed, and connect the latest data points.
Sure, you can do it with Excel, or some type of money management software but doing it by hand makes it all the more real.
Something comes alive when you write or take notes by hand – something that doesn’t happen when you see it on a screen.
Every loss, every win becomes that much more important.
You don’t want to trade sloppy because you know it will ruin the beautiful chart you are making by hand.
So do it today!
This was the fifth-best trading hack I ever made.
Keep your rules close – in graphic form
If you haven’t already written out your trading rules then really what are you waiting for?
You have no business trading without a written plan. You know that deep down already.
But the fact is, writing out a list of entry and exit rules and placing them on the wall is hardly going to help when your next impulsive mood comes along.
When impulse takes over you are not going to say this to yourself.
‘Wait a minute, let me read through my (ever so boring) trading rules, so I don’t take this dodgy setup, that I’m desperate to take, but isn’t part of my plan’.
No, no, no.
You’re going to dive straight in, placing the entry order. And only afterwards, say this:
‘Oh my how stupid I am. This isn’t even one of my setups. I can’t believe I’ve just broken my rules again. Next time I swear I’m going to read them!’
This is where a visual display of your perfect trade set up will be of use.
Trading is a visual business. We live and die by our charts.
So it stands to reason, you need a visual display of your strategy.
Reading your rules rarely works in the moment.
But, taking a screenshot of your strategy after it’s worked well in the past, and printing it off, just might.
If every day you see it there, it will, over time burn itself into consciousness.
I’m not talking a full-on vision board here complete with corny images of Mercs, supermodels, yachts, and holiday homes.
I am simply suggesting printing off a chart of your system in action.
Look at it each day. It will focus your mind.
This was the fourth-best trading hack I ever made.
Stop day trading
Yes, I know you want to day trade.
There’s something about making money in the course of a few hours or even minutes that makes it more appealing than longer timeframes.
But there’s rarely enough reasons to be trading all the time.
Trend days don’t happen every day.
While trading a 10-minute chart and a daily chart might look alike, emotionally they’re poles apart.
You can make money day trading, but as a beginner, really?
Beginners who make money consistently intraday are as rare as the Fed raising interest rates!
On the other hand, beginners who blow up accounts are as common as muck.
If you think I’m just being old fashioned, well I’m not the only one who warns about it.
Read this from Motley Fool.
Or this from Nial Fuller.
Day trading is hard. Real hard.
Why would you, as a total newbie want to choose the most challenging way to trade?
The video below is likely fake – but it stresses an important point.
Day trading can kill the soul, and the bank balance to boot.
When I eventually stopped day trading, I also stopped hemorrhaging money.
It was the third-best trading hack I ever made.
Trade one system only
Trading is highly addictive. Even if you’re not day trading the urge to trade constantly is strong.
For those who do decide on swing trading or position trading, the biggest issue now becomes that of trading multiple systems.
Daily charts can be tough for a whole different reason than day trading.
It takes patience to sit there idle days at a time.
Trading off a daily chart is like those World War 2 fighter pilots, who’d sit around playing cards all day. And then suddenly they’re off, into the midst of battle.
Trading from a daily chart can be like being in the fire brigade.
Like being a goalkeeper when your team is dominating possession.
Or like fishing.
You get my point.
Endless boredom comes with trading off a daily chart – which is one of the reasons why I started this blog.
One way to mitigate the boredom is to have enough non-correlated markets to choose from. A wise move.
But often the swing trader decides they’ll trade multiple systems.
And they usually pay for that decision, getting all tangled up in a complex web of systems all doing opposite things at the same time.
You lose focus. If one system loses, you veer off course, with one system’s loss affecting your mental state, which in turn affects the execution of your other systems.
What starts off as a legitimate way to make more money, ends up the opposite.
The mind can’t cope with multiple things at one time.
Multiple systems are like multi-tasking, seems a great idea, but performance suffers.
Accept the boredom of daily charts as a part of trading. The same way you hopefully accept stop losses and losing trades.
Focusing on one strategy and you become intimate with it.
And as challenge meets skill the flow state takes over.
Trading one system only was the second-best trading hack I ever made.
Trade one direction only
Incredibly the biggest improvement I ever made was not giving up day trading, not sticking to one system only, it was my decision to commit to one side of the market only.
In my case going long and giving up shorting.
I have written a little about that here.
I’m not suggesting you give up the short side – if that’s where you excel.
But I am suggesting sticking to the side that works best for you.
We all have to play to our strengths in this business.
And if most of your wins come on one side of the market, then it’s real dumb trading both of them.
My own shorting disasters are as bad now as they ever were. So I avoid it altogether.
I used to think I wasn’t a proper trader if I didn’t trade from both sides.
But when I did trade both sides, I’d constantly get tangled up, flipping from long to short, short to long. It just added to my already bad habit of overtrading.
So, in the end, I quit all ideas of being a proper trader – for the very tangible outcome of making money instead.
And soon I learned there were many traders who had a preference for one side.
The best trading hack I ever made was to stick to one side of the market only.
Simplify simplify simplify
The chances are, your trading isn’t working because you’re tangled up in a mess of timeframes and systems and market directions.
What happens when you strip away all that?
You are left with the best of the best, that’s what.
You get order.
You suddenly know what you’re supposed to be doing each and every day.
And you can get on with life without worrying about your latest trading position.
Simplification will improve your trading.
I don’t know about you, but I got into trading for the freedom and the peace of mind it brings.
You get no peace of mind if you’re getting in your own way all the time.
It’s a vicious circle.
Being overwhelmed leads to poor decisions, which in turn leads to being even more overwhelmed.
The downward spiral is very real. Trading can make your life a misery if things are not going well.
These five hacks helped me, and at least some of them I’m sure can help you too.