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Thread on Trading Psychology🧵 #TradingTips
New traders worry about hitting profit goals while experienced traders worry about following their system & managing risk.
🧡&🔁
New traders worry about hitting profit goals while experienced traders worry about following their system & managing risk.
🧡&🔁
STOP setting daily, weekly, or even monthly profit goals.
Setting profit goals in dollar amounts or percentage wise is the wrong mindset.
When you do this, you will force unnecessary trades to meet your profit goals.
Setting profit goals in dollar amounts or percentage wise is the wrong mindset.
When you do this, you will force unnecessary trades to meet your profit goals.
What you should be focused on instead is simply executing your trading plan/system & improving your edge.
Stay disciplined and wait patiently for A+ setups and executing when they form.
It sounds so simple yet so many traders cannot be disciplined enough to do it.
Stay disciplined and wait patiently for A+ setups and executing when they form.
It sounds so simple yet so many traders cannot be disciplined enough to do it.
If you truly know your trading system, you should know on avg how many A+ setups you get a week/month. You should know what your winrate is & what your average winner is vs your average loser for RR.
Once you know this you have no need to set profit goals because all you need to do is have trust in your system and follow your trading plans and let the probabilities play out. When you know your system you should know on average what % return it produces monthly.
Lets break it down a bit more with this example using a systematic approach:
Lets say these are your stats:
- You get on avg 3 A+ setups a week
- Your winrate is 50% with 2RR based on data previously collected
- You use 0.5% risk per trade
Lets say these are your stats:
- You get on avg 3 A+ setups a week
- Your winrate is 50% with 2RR based on data previously collected
- You use 0.5% risk per trade
This means in 1 month on average:
- You take 12 total trades, 6 winners, 6 losers
- Avg winner is 2r, avg loser is -1r
- Net R is 6r
So with 0.5% risk per trade your return is 3% for the month and with 1% risk per trade your return is 6% for the month.
- You take 12 total trades, 6 winners, 6 losers
- Avg winner is 2r, avg loser is -1r
- Net R is 6r
So with 0.5% risk per trade your return is 3% for the month and with 1% risk per trade your return is 6% for the month.
3% compounded every month over 1 year is over 40% return YoY
6% compounded every month over 1 year is over 100% return YoY
6% compounded every month over 1 year is over 100% return YoY
Stop blowing up accounts by trying to hit home runs every month trying to make 10-20% every month.
Stop letting people tell you 2-6% a month isn't good.
The base hits will add up over the span of a year.
Stop letting people tell you 2-6% a month isn't good.
The base hits will add up over the span of a year.
And of course you're not gunna have the same exact return every month due to market conditions. You have to adapt to the market. Some months you might be red and others your might have a 10R+ month.
Some months you might get 5 A+ setups others you might get 20.
Some months you might get 5 A+ setups others you might get 20.
The point is to take your setup when it's there and trust your system. Stop setting profit goals & trading your P/L.
Look at the bigger picture.
Trust that your system will produce based on the stats you have previously collected and let the probabilities play out.
When you do this and not worry about profit goals the money will follow. #TrustTheProcess
Process driven >>> Money Driven
Trust that your system will produce based on the stats you have previously collected and let the probabilities play out.
When you do this and not worry about profit goals the money will follow. #TrustTheProcess
Process driven >>> Money Driven
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