TRADING METHODOLOGY

The old pro traders always say:

Focus on the process and the results will follow.

Well, it doesn’t take a genius to wonder:

What the heck is the process?

This baffled me for the longest time.

Looking back I finally understand what the “process” is all about.

Now:

This isn’t something you’ll find on the internet, books, or forums, etc. but
based on my experience over the years.

And I will reveal it to you right now…

Find a trading methodology that suits you

It has to be a trading approach that resonates with your beliefs in the

market.

If you believe in trends, then trend following would suit you.

If you believe in chart patterns, then classical chart patterns would suit you.

If you believe in momentum, the breakout trading would suit you.

You get my point.

Develop your trading plan

This is your guiding light in a world of darkness (as trading can be a really
dark place). Your trading plan should tell you:

 What are the conditions of your trading setup?

 Which timeframes are you trading?
 How to enter your trades?
 How to exit your trades?
 How to manage your trades?
 How much to risk on each position?
 Which markets to trade?

Execute your trades consistently

This is where your discipline comes into play. There’s no point in developing
your trading plan if you don’t follow it (like going against a GPS and
wondering why you’ve not reached your destination).

I would suggest at least 100 trades to get a decent sample size.

Record and journal your trades

This is what separates winning trades from losing traders. I’ve never met a
successful discretionary trader who doesn’t record and journal his trades.

Here’s the deal:

If you want to improve your trading, you need to know what you’ve done.
And the only way to find out is to record and journal your trades, period.

Review your trades

If you’ve consistently followed your trading plan, one of two things can
happen.

You’re a consistently profitable trader or loser.

Whatever the case is, give yourself on the pat on your back. You’ve come to
a level where 95% of traders never make it.

If you’re consistently profitable, then congratulations!

But… what if you’re still losing?

Then this is where you turn your losing trades into a money-making
machine.
Remember the trades you’ve recorded earlier?

Now, you’ve got a collection of charts and data that highlights your winners
and losers.

So, look at your losers and ask yourself these questions…

 Are there similar patterns that occur which usually lead to losses?
 Is there a filter you could add to prevent it?
 Are you trading against the trend?

There’s a high probability you’ll find something that’s causing these losses to
occur over again.

Tweak and improve your results

Now, it’s back to the drawing board once again.

Once you’ve identified the problems with your trading, go tweak your trading
plan — and repeat the process.

Some final words…

Is this hard work? You bet.

Who said trading is easy besides the one promising you quick riches.

Go focus on the process and the results will follow.