I’d like to begin this piece by telling you that it cuts through the superfluous and presents a sure-fire way to becoming a consistently profitable trader.
Yes, I dare say it.
This solution is so simple, yet most people won’t follow it long enough for it to produce results.
They won’t follow that solution for the same reason that they won’t stick to a strict diet or go to the gym on a consistent basis, or even quit smoking.
The pull to let our moods and emotions dictate our lives is just too strong, and most people end up not following through on their plan, diet, goals, you name it.
Still, I want to let you know that change is possible.
Absolutely—you can become a better version of yourself and achieve your goals of becoming a consistently profitable trader.
And as much as possible I’m here to help create a paradigm shift for you with posts like these.
So, let’s get to it.
If you’re like most traders, you often envision your future potential self –you picture yourself as a consistently profitable trader.
But I’m sure you’ve certainly wondered whether you can actually become that person.
Because sometimes when you look at where you are and where you want to be, the contrast can be so stark that you begin to wonder whether this ideal version of yourself is even attainable…
Or is it just some false hope that you might have – like a mule that trots along hoping to catch a carrot on a stick.
After all, while some people do go on to become consistently profitable traders, the vast majority don’t – in fact, they don’t even come close.
So, as aspiring consistently profitable traders, how can we not let our dreams of consistency be just dreams?
Well, as said above, there’s a reliable, sure-fire way to achieve that elusive consistency in trading.
Here it goes: Focus on one good trade!
One Good Trade
You see, everyone who has ever been successful in this field understood this.
They understood that they would trade much better if they had no memory of how much they made or lost previously, or if they didn’t try to predict how much they would make or lose at the end of the day, week, or month.
In other words, these consistently profitable traders have understood that their focus needs to be on “one good trade at a time.”
This “one good trade at a time” concept is, without contention, the main factor in them achieving success.
To be clear, this is not unique to trading; in fact, you’ll hear people in sales talk about the importance of focusing on “one good deal at a time”, and, in sports, you’ll hear coaches tell their athletes to focus on “one good shot.”
At its core, one good trade, deal, or shot is an exercise in staying present.
Simply put, our past experiences often shape what we do in the present.
Whether the cumulative total of all our past experiences is net positive or negative, we use that to project into the future and navigate the present.
We create expectations regarding future outcomes, which often results in performance anxiety and disappointments when things don’t pan out the way we expected them to.
Of course, it’s important that we learn from our past so we can better plan ahead; but the more we worry about the future (e.g. I better get a winning trade this time or I’ll be disappointed) and ruminate about the past (e.g., I should have taken this trade not that one), the less effective we become as traders.
The state of being fully present without agenda, goals, or expectations is a performance booster. When our minds are at their quietest, we can fully immerse ourselves in what we’re doing and perform better as a result.
Unless there’s a real need to know how much you made or lost previously, or how much you stand to win or lose in the future –for strategic purposes –thinking about your trade outcomes is NOT going to help you.
You need to stop being so obsessed with your trade outcomes, and give the trade in front of you 100% of your focus, patience, and good intention.
One good trade at a time.
That’s it! Nothing more, nothing less.
One Good Trade In Practice
Let’s see how this all works in practice.
Say you’re a day trader.
First, here’s what I want you to do.
Before you begin the trading day, say this to yourself with intention and purpose:
“I’m going to keep a calm and rational mind no matter what happens.”
“I will focus on placing one good trade at a time. “
This little mental rehearsal should be part of your trading plan. View it as another rule in your plan that you need to follow.
That’s the first part.
The second part is to actually place one good trade.
One good trade is a trade where you’ve followed your rules.
As you focus on one good trade, keep this in mind: The more you seek to find a trade, the less effective you become as a trader.
Confirmation biases will make you see what you want to see, instead of seeing what’s there to see.
A good trade candidate is one that jumps at you through no special mental gymnastics of your own.
This is very important. Let the market come to you based on the rules you’ve pre-determined.
And when it does, just execute your trade –again, based on your rules.
If you’re a day trader, maybe place a maximum of three of those good trades per day and then call it a day. Win or lose, come back the following day.
You only have a limited attention span and will power, so by limiting your number of trades, you’ll remain present and objective for those trades and won’t end up overtrading.
If you’re a swing trader, place a maximum of four of these good trades per month.
What this all means is that some days (or months), you’ll get only one good trade; other days (or months) you might get nothing.
You need to accept this.
Always approach trading with such purpose and structure and you’ll be amazed by the results.
Two Common Mistakes Traders Make
Here are two common mistakes I see traders make when trying to implement this “one good trade” concept.
1. They judge a trade based on its results.
Most traders look at how much they make or lose and judge how well they’re been trading is based on these numbers.
In their mind, if they have a profit, it means they are trading well, and if they have a loss, it means they are trading poorly.
Of course, this isn’t necessarily true.
A winning trade is not necessarily a good trade, and a losing trade is not necessarily a bad trade.
Make sure you understand that.
Sometimes you’ll lose although you have done everything right.
This cannot be avoided.
But, in the long term, a long line of “good trades” will almost certainly lead to a positive trading performance.
2. They focus on too many setups.
Often, traders try to trade too many different setups.
This is poor management of time and energy right there; plus, it promotes overtrading.
You don’t want the machine gun approach. You want the sniper approach.
A consistently profitable trader specializes in one or two setups, and he/she focuses on trading those flawlessly.
They also do not force trades. They accept and embrace the most important part of this job—the waiting.
They wait for their setups within a set window. But if no opportunity appears within that window, they make wise use of limit and contingent orders so that they don’t have to sit in front of their screens all day long.
The consistently profitable trader understands that he/she will not be in every move and they’re fine with it.
Again, they’re not trying to make money; instead, they let the market come to them and focusing on placing one good trade at a time.
I began this post by telling you that I was going to present a simple yet sure-fire way to becoming a consistently profitable trader.
As you saw, this one good trade concept is very simple, yet powerful provided you have a sound trading system, to begin with.
But make no mistake… simple doesn’t mean easy.
Again, the pull to let our moods and emotions dictate our lives is just too strong, and most people won’t implement that solution long enough to see results.
It’s sad, but it’s reality.
So now the question is, can you set yourself apart from the crowd? Can you walk the extra mile and go where most people won’t?
I’ll leave the answer to you.
Remember, one good trade after another.
That’s all you need!
If you do that, the money will take care of itself.
By the way, do you need to deepen your understanding of risk?
If yes, I’ve created a mini-course called The Psychology of Risk for Traders.
It’s absolutely free, and in there, we see how you can develop a more thoughtful approach to risk management so that you can begin to navigate market uncertainty more skilfully.
The Psychology of Risk For Traders
As a trader, risk management is critical to your success.
This FREE mini-course will show you how to become a more thoughtful risk manager.