How To Stick To One Trading Strategy [The Complete Guide]
“The successful man is the average man, focused.”
During my latest poll, I figured out that one of the top people were facing is not being able to stick to one trading strategy. The temptation of trying the ‘new thing' in the hope that it will be the road to success is always there.
Shiny object syndrome: the tendency for someone to get distracted by new thoughts and ideas, their own and others, and never focus or complete anything. (WarriorWiki)
Definitions being given, how do you avoid falling into the shiny object trap?
Some believe that staying focused (i.e. the ability to stick to one trading strategy) is something that just happens. I'm not thinking in the same way. In fact, I believe that there are essential things you can do to increase your chances of staying focused.
3 Things To Help You Stick To One Trading Strategy
My goal with this article is to share those keys that will help you stick to one trading strategy. I'd remind you not to take them blindly. They've helped me trading the same trading strategy for close to 2 years now. For sure, I tweaked a few things here and there but not too much, and I don't see why I'd change things.
#1: Write Down Your (Concrete) Goals
As interesting as it sounds, the way I was shaping my goals verbally, severely influenced the way I was trading. Take the two cases below:
Goal: My goal is to become a Forex trader & trade full-time.
Result: since you want to "trade full-time", you are more likely to be searching for trades at any point of the day. Because after all, the only way you'll ever trade full-time is by taking more trades & having too many trading strategies.
Goal: My goal is to trade based on a proven strategy and achieve 5% of return per month.
Result: your goal is to execute on something concrete and isn't as vague as Case 1. Good start! That means you understand that trading a specific strategy will provide you with a certain return. If you deviate from your strategy, you're technically not reaching your goal.
Goal: My goal is to trade based on a proven strategy and achieve 5% per month because I want to travel the world and continue trading.
Result: this is very similar to case 2. However, instead of aiming for return only, you've added a reason to achieve your goals. One of my mentors, Peter Voogd, says "Reasons come first, goals come second". Because you've added a reason, every single action you take in trading will either be bringing you closer or further away from your goal. You'll be thinking twice before moving that stop loss or doing anything you aren't supposed to do :)
What you should get out of this is that you must write down precise goals and include a reason for reaching each of your goals. If your goal is just to make money, it isn't concrete.
If your goal, however, is to manage money so you can travel the world and live in that specific hotel in Thailand (just making this up :)), you are more likely to stick to one trading strategy because you know that will get you closer to your goal.
Watch: The Only Trick You Need To Achieve Trading Consistency
#2: Go On An Information Diet
While a lot of people talk about information overload (and I was one of those people), I recently came across an article that made me rethink.
I still believe 100% that you need to limit the information you let enter your mind. There's no way you'll become great if you try to get good at everything.
That being said, unlike a diet, I'm not asking you reduce everything. Instead, I want you to go all-in on the few things you really want to learn. Pick 2-3 topics, and commit to diving deep on them. Everything else you come across, consider it as the enemy.
Simply put: you can't read books that aren't related to what you want to learn. You can't even search on Google for anything that you haven't pre-decided you would search for.
Here are some possible topics you might learn:
- "Trade intraday with the Bollinger Bands"
- "Spot reliable breakouts"
- "Trade the Asian session with price action" (more on that here: My Favorite Forex Day Trading Strategy)
One of the big mistakes I see new traders make is wanting to trade about "making money trading" or "trading Forex successfully". That is not specific enough and it'll leave you all over the place with no real results.
One thing that might help is to see all the information around you as a food with its nutritional value. That's where the article I came across comes into play: Go on a High-Information Diet.
Become the master
Once you follow a high-information diet, you allow yourself to become an expert at your particular style of trading. Then it becomes your job to get better at that particular style.
The importance of adequate knowledge
“If you want to be truly successful, invest in yourself to get the knowledge you need to find your unique factor. When you find it and focus on it and persevere your success will blossom.” - Sydney Madwed
While it's very easy to get overwhelmed by information about trading, you shouldn't underestimate the lack of information you might face. If you currently can't execute on your trades because of fear or if you feel uncertain, it might be because you haven't taken enough time to invest in yourself.
Educate yourself, learn, and then apply.
Do not expect that you'll be a master if you never spend time crafting your trading execution. Make it a habit to learn as much as you can on what you're the master at (in terms of trading style), and combine it with proper money management, the right mental state, and a solid review process.
#3: Understand Your Stats
Understand the statistics behind your trading strategy os powerful!
Often, we switch to a new strategy because things aren't going well with our current trading strategy. However, are things really going bad, or is this a normal drawdown for the current strategy?
Most of the time, the drawdown we are experiencing is normal. Backtesting the strategy at another point in time would reveal a very similar drawdown. So why worry?
Your Turn! What Will You Do Now?
Now that you've seen the tactics I use to stick to one trading strategy, what are you going to implement? I want you to comment below and let everyone know. Use the comment box as an accountability partner, and then go take action! Those are your first two steps today.