VERY useful post on becoming a CPT by @investorslive – Consistency vs. Dollar Profits

Great post with lots of value, especially for “grinders” like me.

What do I mean by consistency?Being a consistent trader means that you can take profits from the market over and over again. You come to the market each day and know that you are walking away with a paycheck. You’ll have your losing days as well, but overall you have developed a skill that allows you to consistently make money. Dollar profits are nice, but they should not be your main focus. You should be focused on trading consistently in order to validate your trading abilities. Consistently making $200/day is more impressive than making $10,000 on one trade. This idea may seem crazy to some. Why would you want to make $10,000 over 50 days instead of taking it all in one shot? The answer is simple: one method is more sustainable in the long run. Think about it this way. Who do you think would be a better trader overall? The guy who had 50 $200 profit days to make $10,000 or the guy who made $10,000 in one trade? The guy who had 50 $200 profit days has proven himself over and over again, whereas the trader who made $10,000 in one shot has not.

Source: Consistency vs. Dollar Profits

Below is by FAR one of my biggest issues. I can nail a trade with a solid plan, but it’s NEVER good enough. I kind of knew this already, but thanks to Nate for helping me discover it more clearly.

3. Appreciate Your Progress
Trading is great because it’s a constant challenge; you can always do better. That being said, this makes it so some traders are never happy because they always want more. Learn to appreciate your progress. If you are consistently profitable, you are doing better than 90% of traders and you need to recognize that. Try to understand the necessity of each step in the process of becoming a successful day trader. Even if you only make $50/day from trading, you are on the right path, as long as you remain consistent. Higher profits will come as you keep working at it.

Watchlist for 5-13-2015 – No watchlist – Deep thinking day

My frustration from yesterday has dragged into today, I’m taking the day off to do some deep thinking and introspection.

I figure Wednesday is a good day to take off, I’ve had a couple mediocre trading days Mon-Tues and this allows me to get back at it to end the week.

Odd, after just one day of ditching my smart phone I’ve already started to be more introspective. (Blog post series coming soon)

Distilled trading rules

Distilled and revised trading rules

Like most people I redo and edit my trading rules when I get frustrated. Overall trading has been going very well for me this year, but frustrated lately by a lot of the same issues and I think my too diverse trading rules may be partially to blame. Its very easy to come up with or copy a bunch of trading rules but once they sprawl out so much I think its difficult to remember them all and be disciplined about following them all.

So I’ve decided to dial it back to a list of 10. I could probably do more, maybe less but I like the idea of constraining myself to a manageable number that can be re-read daily and have pinned to my desktop. 

I also wanted to focus on being more of a day trader and being in cash each night. The majority of my success comes from day trades. The majority of my failures, holding losers overnight. I’ve become so conditioned to hating overnight holds that even when I’m holding a winner I get anxiety. On nights that I’m in cash I’m so happy and will literally say to myself “Yep, I’m in cash mother fucker.” and smile. A perfect example is a day like today, I held overnight and got bought in, while a manageable loss I thought about this stock all night, got up this morning dwelling on it, then got the email I was getting bought in. It then botched my prep mentally pre market and I’ve been dwelling on it all day.

Had I followed my “revised” trading rules all of this anxiety and wasted mental energy would be gone.  I’m so much happier when I “Nail and Bail” even if its a loss, the longer I hold a stock, again even if its a winner, the more annoyed and aggravated I get.

So this rule set has been built to focus on what I do best, what I enjoy doing most and constrain me more.

If you are familiar with my friend and mentor @investorslive you will notice this list is built around and inspired by some of his favorite rules. Giving credit here so I don’t get accused of plagiarizing 🙂