Lets talk about consistency, the ever so elusive, double edged sword. Consistency is what every trader strives to achieve. No matter what the trading strategy is or what the market is (stock, options, forex) traders seek consistency. Any vet trader that has been around will tell you that a strategy backed by discipline will assist in the process of becoming consistent, and with consistency comes great success. That is easier said than done though. The holy grail of trading IS consistency. Making more profitable trades than losing trades, bigger winners than losers is the exact thing we’re ALL looking for when trading! Regrettably this is not easily achieved. You see, most new traders make the common mistake of not having a clue on what to do to achieve success in the markets. Moreover most new traders come to wall street and leave broke within a year never to return to trading. This is a result of the wrong type of consistency (larger losers than winners). Your trading brokerage will love you but your P & L will not.
In past articles I’ve touched on the importance of both strategy and discipline. I’m actually writing this to tie those two things together to end off my principal point, which is: successful trading is the by product of being prepared for what the markets might throw at you. As such, we have to know how to react when markets are volatile. By being ready, with a strong strategy and applying that strategy with discipline we will, by extension, achieve a high level of success and consistency. The crux of the whole deal about being consistent is we must find something that we understand and are comfortable trading. When we reside in that space trading doesn’t come across as intimidating and we start to make better trades. By applying your strategy and backing it with discipline, consistency will follow. The bottom line is consistency can make or break you as a trader. The wrong type of consistency, larger losers than winners or not trading with proper risk management, will assist in your account bleeding out. That is clearly the wrong type of consistency. Over trading is another area that kills traders, this can obviously lead to paying more for trading than one should. The type of consistency I personally strive for is twofold. First, I’m consistently looking for good tradable set-ups which offer opportunities for proper risk management. By doing so I know how and when to react. The second, booking profits. With all that’s being said…what does your consistency look like?