Improve your focus, improve your results!
Understanding trading psychology plays a huge role in your success as a futures trader. After all, you are the driver of your success, so you need to understand how your mind works. One of the most important steps to long term trading success is getting organized and focused. You need to be able to narrow down your focus to the most profitable setups, so you can nail them when the time comes. Focus doesn’t mean you are staring at 10 screens for 6+ hours. It means you are attributing time to the things that make you the most money. Many traders struggle to focus properly, so I’ve compiled a list of a few ways to get focused when trading the futures market.
What are you trading?
It amazes me how some traders when asked, say that they are trading 10+ instruments intraday.
Day trading requires ultra-precision in your entries, trade management and exits. This is difficult to do if you are spending your time clicking from market to market. Why do traders do this? I believe that it comes from FUMO (fear of missing out). Traders are afraid of missing opportunities, so they spend their time going from market to market, looking for that opportunity. Most institutional traders focus on a single market, they might sit on the CL desk or the Dow Jones desk. That’s it, that’s all they trade, and as a result they capture the significant moves as they unfold in the market each day. So, review the instruments you trade and reduce them down to the essential few. For example, the CL contract provides at least two opportunities each day to harvest 50 ticks. You can make good money making just 20 ticks per day, get consistent at that level and then increase the number of contracts you trade.
When deciding which instruments to trade, think about the unique characteristics of each instrument.
- What is the average daily range (do you have enough opportunities to hit your goals).
- What are the key levels where your instruments are likely to turn (AOI’s) Areas of Interest.
- Historically, what are the key price points?
- What is the impact of political moves?
- What time of day do you see most movement?
- What news impacts those instruments?
As you start to think this through, you will discover the most appropriate instrument(s) for you. There is nothing wrong in just focussing in on a single instrument. For example. Call yourself an Oil trader, just trade oil, become an expert in this market, your trading account will love you for it.
Block out the noise
In the world of trading, most of the messages you read are just noise. This may include message board posts, tweets, or analyst opinions. It’s easy to get carried away by wondering what everyone else is thinking about a play, but ultimately, this is a road block on your path to trading success. “If John says to buy, but Bill says to sell, what do you do?” Focus on your own intuition and trading style so you can be on your way to self-sufficiency. You need to determine which types of messages are helpful for your trading strategy and which ones just get in your head and confuse you. I’m not saying that you shouldn’t take insights from other traders, however, if you are constantly looking for other traders to validate your ideas, you will miss out on a lot of great setups (and maybe even enter some sub-par setups). Ignore the masses and create your own trading plan.
Define your trading strategy
If you try to catch every single play, you are destined to fail. You need to focus on what your strengths are and define a trading style accordingly. If you are constantly looking for short plays, long plays, news plays, etc, you are overwhelming yourself with too much data. Look at trades you have made in the past and focus on where you are making the most money. If you don’t have a long trading history, focus on mastering a trading style that resonates well with you. You don’t need to be a ‘jack of all trades’ to make money. You simply need to master one trading style and constantly improve upon it. I describe this as your signature trade, create it, own it and execute it with precision.
Like any job, trading requires focus and clarity, so make sure that you place yourself in an environment that is conducive to your success. The ideal environment will be relative to your own personal needs. Make sure to eliminate distractions that hold you back. Do you have to take your kid to school in an hour? Does your messy desk distract you? Do you get side-tracked by social media? Don’t trade under less than ideal circumstances. If you are trying to nail a trade, you need to commit your focus to the trade. If you are worried about what you must do later in the day or keep getting distracted by pictures of ex on Facebook, you are not focusing the proper energy on the trade. Sure, many traders can multitask, but can you? Be conscious of what distracts you and work on eliminating those distractions.
They say less is more, nothing could be truer than trading activity, focus more on less and watch your profits soar.
If you would like to experience how to make this breakthrough get in touch [email protected].