Have you ever found yourself in a situation where you think you’ve got the hang of Forex trading but then the next day you lose all the profit you made in a bad trade?
If you are struggling with the same thing, this blog is for you.
We have previously talked about habits and attitudes of successful traders and how they differ from those who struggle. It is important to note that the definition of success in trading is consistency.
This does not mean that you never lose any trades. It only means that at the end of the day, your overall wins are bigger than your overall losses. That is the best you can hope for in trading, and even this will not happen 100% of the time. But if 80% of the time you have more in your account than you started with by the time you close all positions, you are a successful trader.
For anyone who is struggling to achieve this, I am listing some points below that are all too common and which results in inconsistency in trading.
Potential reasons for inconsistency in profits
Take a look at the list given below:
- You are not confident about your trading plan
If you haven’t done enough research and don’t have evidence and an informed opinion behind why you chose a trading plan, you are more likely to keep trying different things. This can cause inconsistency of results.
By saying this, I do not mean to imply that you should stick to a trading plan that you have only recently started implementing and haven’t tested enough. Of course you should take some time to make sure it’s the right one for you, but once you have it stick to it.
The only way of being comfortable with your trade plan is to test it out enough and to have reasoning behind all aspects of it.
- You let emotions get the better of you
I have written a lot about emotional management and trading psychology before as well (you can take a look at some of those articles here), but it bears repeating.
If you let emotions get the better of you when you’re trading, you are likely to struggle with maintaining discipline. You can’t make the best of even winning strategies when you are emotional because excitement and hope might make you stay in a trade too long. Or fear and stress can make you exit too soon. So you have to keep emotions at bay.
- You don’t consciously try to be consistent
It doesn’t come naturally to most people. Most people’s reaction to the market going in their favour or against them is excitement or panic and they base the decision they take on those feelings.
You have to actively look for opportunities that let you implement the strategy or plan that works for you and stay consistent.
- You prioritize short-term profits over long-term
Consistency is the key to long term success and profits. However, a lot of new traders tend to focus on the short term.
The problem with this is that they don’t have a strong enough foundation and the profit they make one day can easily be lost in a loss the next day. So short term profits rarely last. You have to focus on the bigger picture.
Remember that trading is work and you should practice the same kind of discipline for it as you do for any other kind of work.