Two different paths to improved trading consistency

I have observed two different paths to improved trading consistency for active traders.

  • Camp 1- Positive on most trading sessions, with minimal drawdowns relative to profitability
  • Camp 2- Middling around, controlling risk, and then catching largely profitable trades

Most traders fall into Camp 1 of daily and systematically churning out profits.  They keep their risk low.  Their gains are more than their losses.  They are positive on way more days than negative.  They know what they want to trade and specifically what it looks like and how to find it.  Their work is to slowly increase size in all of their trades so their PnL increases.

But some traders fall into Camp 2 and that is okay as well.  I write this post because my sense is too many new and developing traders think they need to fall into Camp 1 or Camp 2, without recognizing both are fine.  New and developing traders buy into the notion that they have to be heavy hitters and catch large profitable trades.  Or they buy into the notion that they have to be conservative and slowly and steadily churn out profits.

Camp 1 works for some successful traders.  Camp 2 works for some successful traders.

I had a nice chat with one developing trader in my office today and asked which camp they thought they were in.  The trader thought they were more in Camp 2.  And so I suggested we really highlight and study the trades this trader can make more in.  And I suggested a technique for this trader’s Team to employ to warm up for potential huge trades.

Consistency is your first goal when starting as a trader.  But there are different paths to trading consistency.

*no relevant positions