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Consistent trading profits: Mastery old strategy vs changing new one

To achieve consistent trading profits, traders must master their strategy

The answer to consistent trading profits (for any kind of trading, not just forex trading) can be found in another activity – firing a weapon. Anyone who has fired a rifle professionally should be acquainted with the concept of ‘grouping your shots’. A close grouping is a result where the shots land very close to each other. It can be achieved by an individual who has familiarised himself with firing a weapon. Good posture, trigger pressure and control of breathing contributes to consistent results where the shots land closely. A close grouping on the target board by a firer is very similar to consistent trading results.

Picture of target board with close group

A close grouping shows that the firer has achieved consistent results with his firing

A close grouping is the ideal that each firer wants to achieve. Unlike in the movies where protagonists always hit where they aim, weapons need to be calibrated or personalised to each person in real life. Once a person can shoot a close grouping however, the weapon can be calibrated to make sure the closely grouped shots land in the bullseye.

Target board showing closely grouped shots falling on bullseye

As long as shots land closely grouped, the weapon can be calibrated to land the shots on the bullseye

 

New firers hit all over the place

Obviously an individual new to shooting is not likely to achieve a close grouping. His shots land all over the place. That is because he is not in control of the important requirements of shooting. Therefore the outcome is rather random. At this stage practice is required.

Target board showing poorly grouped shots

A firer not in control shoots all over the place

 

Trading is similar to shooting

Trading requires individuals to identify trading setups and trigger orders according to the requirements of the trading strategy. A trader new to his strategy is likely to shoot all over the place like a new firer while an individual who has mastered his trading can achieve a close grouping. Many new traders do not understand that trading requires practice and effort. Instead they blame trading results on a poor trading strategy and move on to a new one. Who are these traders likely to be? Among those who have learnt many trading strategies but master of none is one good place to look.

Another target board showing badly grouped shots

Adjustment lands the shots in another place but the grouping is just as bad

Envision that this group of traders learn to fire a weapon. They achieve a lousy grouping so the shots land all over the place. Instead of trying to master a good posture, trigger pressure and breathing, they  keep changing the target boards, the weapon, looking for a new trainer, going to a new range. Yes some external factors like visibility, wind and air pressure can affect results from time to time (similar to market volatility). But for these traders (firers), their main problem is that their firing will never be consistent, tightly executed. And on the target boards, their shots will always look like what my shooting instructors back in the army call – ‘bird droppings’.

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Even if some shots do land on the bullseye, the overall achievement without a close group is just not pretty at all

 

Mastery requires time and effort

Consistent trading profits requires time and effort. Of course there are good strategies and bad ones. There are also good strategies that might not fit an individual because its requirements do not match the traits of the user. So rather than be on the constant look for a winning strategy, a trader should spend more time looking inward at himself. And once a trading strategy has been chosen, keep at it until you truly know what is right or wrong. Because even a trading strategy can be calibrated to fit an individual but no amount of calibrating can help loosely grouped shots.

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Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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One thought on “Consistent trading profits: Mastery old strategy vs changing new one”

  1. Lakshman Kedarisetty says:

    Nice Article Tiong Hum. As you said, this not only applied to forex, but is useful in real life and in all the works do. I am in total agreement of the article.

    regards,
    lakshman

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