8 Things You Can Do Right Now To Improve Your Trading

Trader's Mindset

Oct 01

Read the 8 steps below to find out how to improve your trading right now:

  1. Figure out and write down your setups. Really in my mind, a setup is not fully defined until, it can be automatically identified programmatically. Define what makes the setup an A+ vs an average setup, what type of conditions are conducive or not conducive.
  2. Define a method for ranking trades. You can incorporate qualitative criteria. You will define your range, example 1 to 10. Example, programmed setup would be worth 5 points, personal bias +- 2 points, price above/below open +-1 point, quality of tape +- 2 points, etc.

    Next, define your MIN AND MAX contracts you will trade for each rank, example Rank 1-3: 2 Lots Max, 3-5: 4 Lots Max, 5-7: 5 Lots Max, etc.

    This will allow you to engage in confidence based betting. I think confidence betting can work provided the maximum risk never exceeds a reasonable threshold, such as 3%-5%.
  3. Define the criteria/rules for adding to a trade.
  4. Define your maximum session/daily loss limit. Don’t let the market find it for you.
  5. Define the hours that you will trade and what would change that for you.
  6. Capture new knowledge. A recent study has been making rounds about how day traders do not appear to exhibit learning. One reason I conjecture is that most traders are not sufficiently capturing their best insights.
  7. Practice in the market replay.
  8. Accept the randomness of the market and how you cannot control the outcome. Not accepting randomness causes a lot of problems with over intellectualizing, adding to losers, etc.

One of my old sayings was “principles over rules”. Principles allow for more flexible pursuit of profits while rules are more structured. Now, I think both are important, define your principles and craft and revise rules to maximize them.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at curtis@beyondbacktesting.com.