Inconsistency

Ask any financial trader to outline how they go about their work and you’ll see that it’s a game of averages. It is seldom the case that a trader will be spot on with every transaction and position they take, and as a result the effects of occasional losses are priced in to the bigger picture to help ensure a profit is being made overall. This is logical, and in fact must be the case in order to deliver any capital yield, and you need to make sure your earnings are counteracting your losses (and then some) on a regular basis. In other words, you need to be consistent in your trading approach, and react to objective, rational trading signals as you trade.

The plight of inconsistency is one that is both bad for the wallet and trading morale. There’s nothing worse than a successful trade that is wiped out in your next move, and having the consistency within your trading style to pull off successive positive trades and build on your portfolio is critical to ensuring wider success. As a result, the tendency towards inconsistency can be classified as one of the more critical mistakes of newbie futures traders, and until you get to a stage where you are comfortable that you are offsetting liabilities on a consistent basis you cannot hope to deliver any kind of serious return on your capital.

So how do you go about achieving this often-elusive consistency, and what steps can you take to ensure your trading is more reliably successful?

Develop A Trading Plan

By far the most effective simple step you can take towards achieving greater trading consistency is to develop and stick to a trading plan. A trading plan should outline what and how you will trade, along with the strategies you will use and the targets you are looking to achieve from your trading endeavours. Having a coherent plan helps alleviate on-the-fly research and discretionary work, because it will usually already indicate whether or not you should enter a particular trade. While the plan shouldn’t be the be all and end all of your trading parameters, it’s a vital part of setting your trading in context and helping to keep you moving towards an overall, big-picture goal.

Taking the time to develop a trading plan before you get started is time very well spent. While the trading plan might not always be the answer to your problems, having one in place and implementing and sticking to it is one of the simplest ways to breed an additional degree of consistency into your trading fortunes.

Do Your Homework

While planning is important, it can’t solve everything, and at times you will be required to make a decision on the spot. This is where mistakes are easily made, and choosing the wrong option on a 50/50 decision can have serious and lasting consequences. Particularly if you end up choosing the wrong option on multiple occasions, this can be enough to tip the finely balanced scales against the weight of your position and your account. That’s why it pays dividends to be as knowledgeable as possible before you hit the markets.

That’s not only to suggest that you should know the theory of successful futures trading before you get started, but that you should also be aware of what’s happening in the global geopolitical climate on any given day – to the point where you should be anticipating future events such as interest rate rises, growth forecasts and continental unemployment figures. Know your markets and the context surrounding them inside out and you’ll quickly find you become much more consistent in terms of picking the right trading option for you.

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