The term consistency gets thrown around a lot and all traders are always looking for consistency. However, less than 1% of all traders will ever make money in this business and chasing consistency is a big issue.
In this article, I want to help you understand what consistency in trading really is, how you can get there and what you should avoid.
What is consistency? Or: what traders think it means
When traders talk about consistency, they mean that they want to realize stable and regular profits in their trading, week after week without much drawdowns and losses.
Of course, that’s a traders goal and who doesn’t want that?! But consistency doesn’t start there…
Why traders can’t reach consistency…
The problem is not that people want consistency and it would, of course, be great if you could eliminate some of the noise from your trading and have a better account growth – obviously. The main issue here is how people approach their trading and they often fail to see the mismatch between what they are doing and what they want.
The average trader usually does not have a good system or a set of rules – sometimes he doesn’t have rules at all. More or less, such a trader takes random trades, is influenced a lot by emotions, makes impulsive mistakes, uses too much risk, changes his indicators and trading signals all the time, he tries out new “systems” every week and jumps around timeframes and markets.
Of course, you can see, or you probably know from experience, that if a trader is following such a path, his results will be all over the place. This is very far from consistency.
But, even worse, if a trader does not have any structure in his trading and always changes what he is doing, then it’s impossible to improve because he doesn’t really understand what is going wrong. He will usually feel completely overwhelmed, does not know where he should start and keeps jumping around.
How to become consistent. 3 simple steps
I used the word simple here which does not mean that it’s going to be easy. Trading is simple, just like getting in shape, being a better student, a good father and a faithful husband, but a look at our society shows us that knowing what to do and doing it are actually two very different things.
Step 1: Get a consistent routine and a trading system
This is going to be the complete opposite way of how people approach their trading but then ask yourself where your current approach has led you…
FIRST, you need a consistent approach to trading and then the results will follow. Most amateur traders want consistent results first before they are ready to commit to something. As we have seen above, and as you probably know from experience, this is not getting you anywhere.
So, the first step is that you make a commitment. You pick ONE trading approach and you promise to yourself that you stick with it, no matter what! Of course, your results will not be great but it’s the surest way to becoming better.
“No man ever reached to excellence in any profession without having passed through the slow and painful process of study and preparation.” – Mark Douglas
When we look at other professions or skills, this becomes clear immediately. As a new med student, you don’t start out performing brain surgery (hopefully), you don’t start flying passenger planes after a few theory lessons and you also don’t attempt to build a new apartment building after your first term in university. Obviously, you will suck in the beginning but that’s ok and we don’t immediately quit once we realize that developing a new skill will take time.
In trading, we fail to see this connection. After a few weeks on demo, we fund our account with our life-savings and then hope to trade just like a professional hedge fund manager or a prop trader who has been doing it for decades. Well, you know how this ends…
But traders lack common sense and don’t see the connection. They think that a better indicator and a new candlestick pattern will fix their trading. Better headphones won’t make you a better DJ and the best pen won’t make you an artist or a writer…
No no no. Back to square 1.
Now, pick a system and dedicate yourself to it. You must master it and every single detail about it. In my trading, I ditched everything else and I became obsessed about reversal trading. I fully committed myself to it and for years I have not looked at anything else besides my one strategy.
I give all our students a set of fixed rules and then, over months and month, I will remind them constantly about how we trade and I will force them (in a friendly way 😉 ) to stick to the plan. The results of our students confirm that this is the right way and for most, having such a consistent approach is a real blessing for them, after all this jumping around.
Step 2: You get consistent results
Ok, now we have a system and rules and we do not change our approach anymore. All good, right?
No! Far from it. Because what will happen now is that you will start losing money and the reason is that even the best system will not “work” if you are not a good trader. This is the hardest stage for a trader and it’s easy to give up, but if you push through it, good things will happen.
The reason why it’s OK to lose is because you are learning the right way now. Without jumping around, without changing indicators or adding noise, your results will not be great, but they will be consistent. When all your trades are taken with the same system and look very similar, you will quickly learn the differences between a good and a bad setup, you will learn how to manage trades and what to be aware of. This can only be learned if you follow the same rules without deviations.
“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” – Bruce Lee
It’s like being back in college, university or school. You don’t change the subject every week because you don’t get it. You know that, at first, you won’t get it but by learning, trying to solve the problems and constantly getting better, you will overcome the hurdles. You just gotta stick with it.
Step 3: You become better
Once you have a consistent system and get consistent results, you will be able to improve and then you have a chance of achieving consistently profitable results eventually.
If you take the same setup every week, hundreds of times per year, you will learn what to do and what not to do. Without the noise and distractions, your problems and mistakes will float to the surface and you can see them clearly.
Even though the results at the beginning won’t be great and you will feel tempted to throw in the towel and look for a new system, don’t do it. You will just repeat the same cycle from before.
Push through it and don’t deviate from the plan. Become the master of 1 system and do not go back to the same old behavior. It’s not pleasant and not easy to face the problems and it’s easier to just look for a new system but at the end, it’s the only way to become better. Not just in trading, but in any area of your life.
Don’t be that guy that always tries something new and then gives up when things get tough. We all admire the people who have stuck with something for years and then became the experts in their field. Make a commitment and pick your ONE thing. Then, in a few years, you will be that person that other people admire because he has preserved.