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Trading Lessons

The 5 C's of Trading Consistency

InvestorEducation / Learn to Trade Jul 04, 2008 - 09:25 AM GMT

By: Nazy_Massoud

InvestorEducation

How many times have you heard that one of the keys to trading success is consistency?

Probably too many times. Well, it is true.

How do you define trading consistency? What are the elements of it?


I have come up with the five C's of trading consistency, which are:

1.   Clarity

The first C of trading consistency is clarity. This is one of the most important elements.

When we are not clear about why we are trading and our trading plan, we jump from one thing to another. Our actions are not focused. As a result, things take longer and we do not produce consistent profits.

With clarity comes focus. When we have focus, we have more profitable trades.

A good test to see how much clarity you have in your trading is to ask yourself:

•  Why you are trading?

•  What markets you are trading?

•  What hours are you trading?

•  What is your trading methodology?

•  What systems are you using?

•  What data are you using?

•  What news sources are you using?

•  How are you managing your environments, both physically and emotionally?

2.  Commitment

The second C of trading consistency is commitment. I know this is stating the obvious. Find out how committed you are by answering the following questions.

When you are trading:

•  What are you willing to do?

•  What are you willing to give up?

•  What do you do when things are not comfortable?

•  What do you do when things are not convenient?

•  What boundaries are you willing to set?

3.  Courage

The third C of trading consistency is courage. Let me ask you a question. Have you had occasions that you know what you need to do and yet you don't do it?

The action might not be comfortable for you, or it might not be at the right time. Do you have the courage to take the action anyway?

This is where clarity comes into place. Knowing why you are doing something allows you to handle challenges that come in your way.

When I talk to some traders, they tell me because of lack of capital, they do not follow all the signals that their system gives them. They start picking and choosing. Then they have more losses than they care to. Then they lose more capital and this vicious cycle continues.

If they had the courage to follow all of the signals, they probably would've been in a better place.

4.  Confidence

The fourth C of trading consistency is confidence. You might know what to do and you don't have the confidence to take the action. You might not believe that you can do it.

This is where courage comes into place. There are times that you might not fully believe you can do it. At these times, when you have courage to take action, you are one step closer to getting the results that you want.

By not taking action, you are guaranteed of not getting any results, both positive and negative.

I remember meeting a person who wanted to trade. However, he was afraid of losing even a penny. In addition, his wife was scared of losing money. As a result, after studying trading for over a year and a half he had not pulled the trigger yet.

A lot of times, we do not want to fail. So we do not take any action!!!

5. Calmness

The fifth C of trading consistency is calmness.

How do you handle adversity? What do you do when the markets go against you? Do you get angry and defensive or do you stay calm and play offensive?

When the markets go against you, do you overtrade? Do you try to make all of your losses in one deal? Or do you stay calm, take a breather and reevaluate the market?

When our emotions go up, our intelligence comes down. We make bad decisions. We take it personally. Then we start doubting ourselves and we start losing confidence. Then we start losing more and more…

When we stay calm, we can evaluate the market from an objective place. We can see the market for what it is and not what we want it to be. Then we can take a calculated risk.

To be a profitable trader, you need to be consistent. To be consistent, you need to develop all the 5 C's.

To summarize, the 5 C's of trading consistency are:

•  Clarity

•  Commitment

•  Courage

•  Confidence

•  Calmness

Consistency is most difficult and most readily proven during tough times. How someone weathers the storms demonstrates their skills.

Here is to making trading success your habit™,

By Nazy Massoud

PS. For more Mental Edge tips and reports on how to have more profitable trades, go to www.MentalEdgeTrading.com .

Copyright © 2008 Nazy Massoud

ABOUT THE AUTHOR : Nazy Massoud, a Wall Street Insider, shows traders, investors and hedge fund managers how to develop the mental edge to execute trades more profitably. For more tips and a FREE report on "The 3 Biggest Psychological Triggers That Can Make or Break a Trader," go to www.MentalEdgeTrading.com .

Nazy Massoud Archive

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