Accept Personal Responsibility to Improve Your Trading

accept personal responsibility to improve trading performance
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Want to move from being a losing trader, or inconsistent trader, to a profitable one? Implement personal responsibility to improve.

Personal Responsibility To Improve

Improve your trading by looking at the internal, not the external. The external (market) is beyond your control, and yet most new traders seek an external solution to what is almost always an internal problem.

If you have trouble getting into or out of trades too quickly, a new indicator or strategy won't help.

If you hold onto losses too long, reading another book about technical analysis won't remedy the issue. If you skip trades because you're afraid of losing, finding a different strategy won't resolve the problem. These are internal problems.

Almost all trading problems are internal. The market will do what it does whether you trade it or not. All you control are your reactions to what it does. If you don't trade, the market is still there but there is no problem. So if you trade and there is a problem, there is only one person to point the finger at...ourselves.

To improve, isolate your issue, stop blaming and rationalizing, and ask yourself what you need to tangibly do to improve the situation. Any steps taken must be completely within your control. Accept that no one else is at fault for your trading troubles but you. Such a realization shouldn't make you sulk, rather it's empowering. Your trading fate lies in your own hands, not someone else's, and that's good news!

You can enter and exit trades whenever you one is forcing you to enter and exit when you do.

If you aren't making money, isolate why and come up with a plan for improvement. Here are some ideas for conquering common trading problems.

  • Exiting winners too early? Make incremental changes each trade and each day. Try staying in your winning trades for a few seconds beyond what you are comfortable with, or place a target one or two cents/pips/ticks beyond where you normally get out. You need to gradually and systematically push your limits.
  • Hanging on to losses too long? Use a stop loss order. This isn't fool proof, as a stop loss can be canceled or moved. If you cancel or move your stop loss, usually this is an impulsive decision which you later regret. While in the trade repeat to yourself that if the price hits your stop loss you'll get out. By keeping that in mind you're less likely to be impulsive ​since you're occupying your mind during the trade and reaffirming your exit.
  • Skipping trades because you fear losing? Knowing your strategy well and the results it produces is helpful here. Fear is based on the unknown. But if you trade a strategy in a demo account for 6 months, and after 600 trades know that your strategy wins 60% of the time that you stand to make $100 on winning trades and lose $70 on losers, then you will know without a doubt that the odds are in your favor. You may still have some anxiety about trading, but the better you know and trust your system, the less anxiety there is. If you don't know your strategy well, get to know it. Trade it in a demo account till comfortable, and when you switch to real money start with trading the smallest position size possible to avoid triggering anxiety with real capital.
  • Taking too many trades? Similar to the problem above, over-trading stems from not knowing your strategy well. A professional trader knows when the odds favor a trade and when they don't. Practice a strategy and see the favorable results it can produce and there will be less compulsion to take trades which could jeopardize those results. If you act impulsively, keep your mind engaged while trading. Continually relate your strategy to how the market is moving. Ask yourself what has to happen to trigger your trade? What direction are you trading in based on the conditions? Where will your stop losses and target be if a trade develops? By staying present with your strategy in this way, you help avoid the compulsion to make trades not associated with your strategy. Also see How Action Bias Sabotages Your Trading.
  • Following your strategy rules, but still unprofitable? There are good strategies and bad ones. Create one, test it out in a demo account, and don't trade real capital until there is evidence it actually works.

These ideas for improvement may not work for you. If that's the case, isolate your issues and come up with ways that work for you. Personal responsibility is your greatest weapon for change because it tells you exactly what to fix. The struggle is taking steps to actually fix it, but if you accept responsibility for the change, it will come.

Final Word

If you really want to improve your trading, accept personal responsibility. Most trading problems are internal, not external. The only external problem you may face is when your broker or your technology fails you (computer, internet connection, etc.). The first time this happens, it sucks, but if you use proper risk controls it shouldn't hurt you. It's still your responsibility to rectify the issue; that may include switching brokers, getting a better computer or having a more reliable (or backup) internet provider. Personal responsibility is liberating because it puts you in control of your own actions, and frees up mental faculties you've been wasting trying to change the external.

Will you be profitable or unprofitable? The choice is yours.