Trader Tip: Trader New Year’s Resolutions At the turn of the year, many turn their attentions at starting fresh with resolutions of improvement and the hope of stopping doing things we know are not right. This is inevitably true in trading as well. At Blue Point Trading we have the advantage of watching many traders work within our profession. This view allows us to see trends of what works and what does not.
So in the Blog we thought we would span back over 2016 and come up with our top 5 things that we would suggest to put on this trader’s New Year’s resolution list. Here they are:
- Trade Plans that are simple and precise (KISS) – as opposed to complicated and vague. This resolution is perennial. So often we see Trade Plans so complicated that they are soon forgotten and will never be followed. On the other side, we see Trade Plans that merely say, “I trade trends.” Both are red flags. Here is the test. If we gave your Trade Plan to 5 average traders, trading the same instrument, would the resulting order book look similar (profitable or not)? If not, you have violated this principle and your trading will yield random results (click here).
- Trade Plan and Journal chart markings (click here) – Having a Trade Plan and Trade Journal is imperative, even if it is not documented. But for those who look to improve, we should strive to be consistent and complete in how we represent our plan vs. actual trading. Though there are many approaches to this, BPT has its approach that we have refined with time. For yourself as well as for BPT to help you, we need to have a standard to better communicate. This is why we encourage you to follow and do this standard. We find those traders that pay attention to this detail tend to have better trade performance. Let’s strive to ensure we document and review our trading accordingly.
- Stay in the trade – You hear us talk a lot about PSRs (Profit Stop Ratios). So many times we see in Trade Plans that the trader will have 1 to 1, 2 to 1 or even 3 to 1 PSRs. And yet, many traders don’t even get half these PSR amounts. We know many think they are just moving Stops to BE after a Pip or two profit, or they think they see something else to spook them from the trade. In the end, it just kills their PSR and can never be profitable. Have a Trade Plan with defined Targets and Stops and then stick to it. STAY IN THE TRADE !!!
- Stop counter trend trading – This one is almost always a killer. It is like picking up nickels from the highway in front of an oncoming speeding bus – you become a bug splat. We are not saying it can never be done. But it is a very dubious Trade Plan and should only be done occasionally with a lot of prior thinking. If you are going to counter trend trade, before you click, think twice. We can say from experience, the trades we most regret, come from counter trend trading.
- Commit to strong professionalism. Communication is key to success. Ensure you do preparatory self-analysis before requesting support – but do request it. However, a lack of self-analysis is often indicative of trader performance. Check the negatives emotions at the door – often it just slows progress. We understand sometimes frustrations/emotions can get us all. Whether you are a BPT Trade Floor Manager, trader, or trade support person we are all on the same team. Let’s make 2017 a professional year in all our communications.
Perhaps you can build on to this list with your own New Year’s resolutions.
Now, we know we all start a new year with great intentions. It has been said that 80% of people that make New Year’s resolutions, fail to meet their own stated expectations. Oddly enough, this is often believed to be the same fail rate of traders. Let’s hope this will not be you.
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