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Trading Education Posted by Team Topstep February 20, 2018

This is How You Become Consistently Profitable

Being consistenly profitable should be the goal of every trader. It’s not about turning a $10,000 account into $1 million as quickly as possible. It’s possible, but that will be the same mentality that will force you to turn a $1 million account into $10,000.

As much as you may tell yourself that you’ll add risk management when you have a big bankroll, you won’t. Instead, great traders are made in the base hits and small gains.

Recently, Anthony Crudele, host of the Futures Radio Show, sat down with trader Rayner Teo to talk about his experience trading and work towards finding that elusive consistency. 

Here is Rayner’s advice.  

1. Get a grip on expectations.

In the first three years of a traditional business, you wouldn’t be looking to go from $0 to $1 million in sales. So don’t expect to make tons of money out of the gates trading. (In fact, many traders have said early gains were responsible for huge early drawdowns.)

In those early years, focus on building your business. Identify your goal and find the strategy that wraps around that. 

2. Realize that trading is uncertain.

In trading, Rayner said that 1 + 1 does not always equal 2. The only thing that you can control in trading is your actions, so it’s important to make them consistent. In that case, consistent actions can result in very different results. In trading, 1 + 1 can equal 2. And sometimes 1 + 1 will equal 3. You can’t control that. 

If you don’t realize that trading is uncertain, Rayner suggests that you may jump from strategy to strategy trying to find the perfect one. That’s time spent in the wilderness with very little benefit. 

3. Identify your goal — and overlay the perfect strategy.

What is your goal trading? Do you want to make X% a year or to make a consistent amount each month? If you want to make a consistent amount each month, then you may not want to be a trend follower. Though trend following shows good results over longer timeframes, it can be inconsistent in the short term as traders take lots of mini losses waiting to ride that big wave.

Conversely, if you are looking to grow your account by X% each year, you probably don’t want to be scalping. For that, you may look at a trend following approach. 

Ultimately, your trading strategy should not just meet the goal but also be related to the amount of time that you have to spend in markets.