New traders spend a lot of time reading and learning. There is a ton of information available online and this is widely used by beginners. However, oftentimes, once a trader has developed their trading plan and begun trading, they put their learning aside and just stick to making trades. Here we will look at how you can continue to improve your trading result by making these 3 changes that will help you continue to learn and invest time in your trading plan.
Practice, Practice, Practice
There is a lot to learn and the best way to learn is to practice. Continue reading information online, but don’t make the mistake of keeping it theoretical. Make sure to put what you read into practice. But, don’t just practice anything and everything you read. Create a trading plan and practice something specific until you become fantastic at that. Start off by practicing one component of your trading plan. Open up a demo account and put that strategy to work. Do this until you really have it and then move on to the next component of your trading plan and focus on that. Put in the hours, but be specific. And at the same time, make sure you continue to read and learn about the component you are focusing on.
Review Your Trades Daily
Simply practicing a trading strategy will not help unless you review your trades. This gives you the opportunity to critique your plan and how well you are able to follow it (self-review). Self-review should be done on a daily basis. You need to go back to every trade you placed and see how well you followed your trading plan, if there were trades you took when you shouldn’t have or trades you should have taken, but didn’t. Look at how well you stuck to your exit plan or if you hung on to trades for too long or exited too early. At the end of the week and again at the end of the month, go through your self-reviews and find the patterns so you can work on improving in those areas. At the end of the month, check your trading plan by analyzing trends and outcomes and work out where you can improve it.
Tweak Your Trading Plan
Reviewing your trading plan is not enough. You need to improve the plan itself based on that review. Don’t make changes before a full month of trading has passed – your plan needs to look at long-term trading rather than individual trades. Make sure to only make small changes at a time as these will be easier to implement and practice during the month. Also, do not make many changes at once or it will be too difficult to isolate which of the changes worked and which didn’t. Once you have made a change, use your new trading plan for a full month and then review it once again. Continue this process until you feel confident that your trading plan is working ideally.