#1: Consistent actions lead to consistent results
I remembered my first trading system.
It was a Bollinger Band mean reversion strategy.
You buy when the price is at the lower band and sell when it’s at the upper band.
The first few trades I did were winners, then the losses came and I figured this trading strategy doesn’t work.
So, I moved on.
Next, I chanced upon harmonic patterns.
I spent half a year learning how to draw these patterns (guess I’m a slower learner).
At the start, I had some wins but slowly, the losses kicked in and eroded all my profits.
Again, I told myself…
“This trading strategy doesn’t work. Let’s try something else.”
Again, the same pattern repeated itself.
I had some winners, some losers, and I gave up the strategy.
One day, I asked myself…
“Why does this always happen?”
“Why am I not getting any consistency in my trading?”
“It’s always a few winners and then the losses pile up and take everything away.”
Do you know what I realized?
The problem was me.
I was hopping from one trading strategy to the next.
My actions were inconsistent. And because my actions were inconsistent, I got inconsistent results (duh).
So, don’t make my mistakes.
If you want consistent results from trading, you must have consistent actions.
Stick to one trading strategy, master it—and then move on.
#2: Your trading strategy must have an edge
Now, being consistent with your actions is important in trading.
But that’s not all because you must also have an in edge in the markets.
You’re probably wondering:
“What does it mean?”
This means your trading strategy must yield a positive result in the long-run.
If it doesn’t, then no amount of consistency will save you because you’ll end up a consistent loser.
Don’t believe me?
Then go down to the nearest casino and bet consistently.
You can be consistent with your risk management, bet size, games you place, etc.
In the long-run, you’ll still lose consistently because you don’t have an edge over the casino.
And it’s the same for trading!
You must have an edge in the markets because without it, no amount of consistency, risk management, trading psychology, etc. will save you.