Jack-of-all-trades, but master of none.
If this describes you, you will never be able to extract consistent income out of the stock market.
Spreading yourself too thin has deadly consequences. One of the most important steps in your trading career is finding your go-to trading strategy. Once you find this setup, your trading career will change forever.
In today’s blog we will discuss why you need to master just ONE trading strategy, and how do it:
Finding Your Niche
The first thing that we've been telling all our students since 2008: There is no holy grail strategy that will work for everyone. Every trader is different.
Stop trying to blindly follow someone's else strategy:
Definitely study other strategies. But you cannot copy other traders and find success consistently. Use them to help build your own.
Why? Because you are not the same person. You don't have the same bankroll as that trader. Different risk tolerance. Different personality. Different instincts.
Find a Trading Niche
Finding and mastering a trading niche is the most important step to finding consistent results in your trading. There are thousands of strategies out there and can be quite overwhelming for new traders. Your quest is to find just one strategy that can consistently generate income for you.
In order to extract consistent income from the stock market, you need to know yourself and tailor that strategy to that.
Find A Strategy That Suits Your Lifestyle and Personality
In order to find the best trading niche for yourself, you need to be very self-aware and know your strengths and weaknesses. The reality is you will have trouble executing some strategies because your personality is not the right fit for it. Some trading strategies require you to be in front of the computer to enter or exit stocks during the market open.
This will not be realistic if you have other commitments during market hours. For example, let’s look at the quick pullback day trading strategy. If you are not a quick and decisive person, you may not be able to execute this strategy successfully. You are usually trading volatile stocks with this strategy, and if you cannot react fast enough, you will mistime the entry.
You could have the right personality for trading this setup, but if you work as a full-time doctor you will not have the flexibility to be in front of a computer during the open. Swing trading would be a better style of trading suited for you. You need to know yourself and find a strategy that you can execute with an edge.
This is NOT an overnight process, and it requires experimentation. However, once you find a profitable strategy you can execute, you have already done better than 95% of other traders who try this.
Find Your Go-To Setup
The best traders have one setup that they know like the back of their hand. Starting out, you need to focus on finding this setup that you can count on to bring you income. You should know all of these things about your go-to setup:
-What type of stocks do you trade
-What time frame you trade on
- What patterns you look for
-What’s considered an entry signal
-What’s considered an exit signal
– How you determine your $ risk per trade
Deviating From Your Niche
Mastering a setup takes time, and you need to be constantly refining it. One of the hardest things for new traders is sticking to your setup and not deviating. There are so many stocks gapping and moving every day, it is easy to get distracted and try to play a different setup.
Discipline to stick to your niche in the early stages of your trading career is CRUCIAL. Once you master your setup and have an extended period of consistent gains, you can start to add more setups to your repertoire.
Trust Your Trading Data
Refining an unprofitable strategy is a slow, painful death. Don’t believe anything anyone tells you about trading setups until you see with your own eyes actual data that supports the thesis.
You will see a lot of claims on social media about supposedly successful strategies. They might work for others, but you don’t know if it will work for you until you have tried it out. You need to refine your strategy yourself:
The only way you will know if you are trading a strategy with an edge is by tracking the data yourself. For this reason, you need to journal all of your trades in order to find trading success. If you are not making money over an extended period of time, you need to make some changes.
If you do not have a positive expectancy with your trading, you are just gambling and will lose in the long run. We recommend using TraderSync for journaling your trades.
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