Updated from its original posting on 27-09-2010
Many new traders always wonder how they can make more profit from their trading (assuming they’re already making money). They attempt to set goals like trying to grab a specific numbers of pips per day or month.
I think it’s better to focus on the process first, rather the outcome.
One of the downfalls of setting specific “pip goals” is that it causes you to get frustrated when you’re not hitting them. You then tell yourself that you will try harder. You start to concentrate so much on achieving the “goal” that you lose sight of the actual step-by-step process you follow to hit your goal.
You follow every single rule in your trading plan and you still end up losing money.
Should this temporary setback stop you from sticking to your regular process?
No. Especially not over a short period of time.
At the end of each trading day, don’t evaluate yourself by counting how much money you made. Instead, ask yourself:
“Did I follow all my rules?”
“Did I execute every trade that my system said I should execute?”
If you answered “yes” to both of these questions, pat yourself on the back. It doesn’t matter that you ended up with a loss–but you now have to find out what mistakes were made and what you can do better next time.
If you answered “no” to any of these questions, slap yourself in the face. I’m kidding. Kind of. If you don’t follow your rules, you are setting yourself up for failure.
Define your process by writing down your trading plan. If it makes senses and fits your trading personality, you will eventually see the profits take care of themselves.