The error that “kills” too many traders (and how to fix it)
Most new traders look for the “secret weapon” that will help them to successfully trade the markets.
They want that system or indicator that will eventually lead them from where they are, to where they once dreamed of.
But if you’ve already got some time in this business of trading, you may have noticed that there is no secret.
And those who have more experience, know that the only (simple but hard) way to reach consistency is by:
1. Having the discipline to develop a system that fits your risk profile
2. Having the discipline and patience to follow your system
3. Develop a risk management plan (trade size and risk per trade)
4. A plan to manage your trades
5. Do not take unnecessary risks!
With patience and persistence, by following each one of these steps, undoubtedly you’ll reach your goals. Just focus on each of these aspects, and the results will come by themselves.
But there is a common mistake among traders… A mistake that I did fall prey of: Distraction.
Every day in forums, blogs, trading magazines, etc. traders write about new strategies, indicators, mathematical formulas promising returns never seen before.
The problem is, that in each one of these blogs, posts in forums, magazines, each strategy or indicator or system they talk about a different thing… So at the end of the day, you have 1000 “different” new strategies or indicators.
Then we try some of these strategies, or try some indicator…Sometimes we test it for a few days, some others a few weeks or even some months…
And guess what happens next?
Almost all of the time it turns out to be not such a good idea (that same idea that seemed so great at the beginning).
What is the result then?
Loss of our precious time… sometimes we don’t realize how important time is for us, specially as traders.
Time does not return, in this case, we wasted our time on something that did not bring anything new, time that we could had used testing the strategy that we have been using, learning more about it.
This happened to me traders at one point, and not infrequently! To some extent, I think it happens to many of us.
We see something new, we “dazzle”, then it comes the phase of “romance” where we see the potential, then we try it, and in the end, we see that the results looked far better on hindsight.
Now, don’t get me wrong … Not everything we try is a bad idea! In the end, these “tests” help us come up with a functional system.
What I’m saying is that most of these “new things” only make us waste our time, therefore, we must have a way to differentiate what things to try and which ones to better forget.
So we can not be wasting our time every day, because this diverts us from our primary plan, and if we keep trying new things every day we’ll never achieve our main goal.
So, what can we do to avoid this mentality to “try everything we find online”?
I call it: The 2 Weeks Rule
The 2 Weeks Rule
Every day we operate the system that we feel more comfortable, confident, etc.
When ever you see something new you think you “have” to try. Put it in a list, and keep thinking about it for a week.
If after a week, it still sounds like a very good idea, and still think it’s worth trying it, starting on the second week, dedicate to it an hour a day. See the results on hindsight.
If you still think its worth trying it, then it is time to give this new “thing” formality and add it to the system or methodology you’re currently following.
I think this will help you a lot, but more important than anything else, it will save you valuable time. It will keep you from the “try everything” mentality.
How can this help you as a trader?
- Eliminate distractions, and keep trying to reach your main goals.
- Stop trying all new indicators, strategies, systems, and focus only on what is worth using The 2 Week Rule.
- Manage your time, is the most valuable resource, remember lost time never returns.
What do you think?