Stock Question and Answer
I’ve been trading for a year now and have seen some success with trading stocks and options. One of the problems I have had is that I’ve made a lot of money on some trades, and then proceeded to give it right back on others. I’m wondering if you have any suggestions on how I can achieve more consistent results.
I appreciate the question, as this is probably a subject that many beginning, as well as experienced, investors have trouble with. As traders, we’d all love to arrive at a point in our trading career where we have developed the ability to produce consistent profits day in and day out. Unfortunately, this is easier said than done. To identify the heart of the matter, consider the following question: Is it realistic to expect consistent returns from your trading if you have an inconsistent, unsystematic approach? The undoubted answer is no! Thus, to better improve your results in trading, you must focus on developing a trading plan. Each and every time you place a trade, make sure you have a specific exit strategy. In other words, have a plan for how to manage the trade if the market goes up or down.
In addition, too many traders become a jack of all trades and master of none. Simply put, they try to learn every available strategy, rather than simply mastering one or two and applying them on a consistent basis. Most successful traders find a few strategies that work and implement them the same way over and over to produce consistent results. Consequently, narrowing your focus to one or two strategies may also improve your results.