Track Your Process, Not Your Equity #trading #markets #process

Our theory is, that if you have a sound system or methodology that you trade with, along with a sound money management component, all you need to do is to have the discipline to follow the plan and success will be a byproduct. Sounds simple enough, but to borrow a phrase from a fellow veteran trader , following your plan is the “hardest easiest thing you’ll ever do.”

If you have the privilege of sitting near your quote screen most of the day, be careful! Those pretty flashing lights tend to raise your adrenaline level and quite frankly our stupidity level. As a young trader I would constantly match my current trading portfolio with the market performance on a daily, or sometimes hourly basis and it led to many rash trading decisions and trading mistakes. Now when I feel stressed, I walk away for a bit, re-read some portions of my favorite trading books I have collected, or do something else non- market related in an effort to deflect my focus so I don’t micro manage positions.

What we have to remember is, that no matter how carefully we lay out each trade, stocks ultimately trade on their own individual time frames. There may be days when the market scores a big day and your portfolio is flat, or even worse. When this happens I would suggest that when the markets close and all is quiet, you consults your charts and review each trade set up. If the trade was placed properly according to your methodology and your stop loss is in place, enjoy the rest of the evening with your loved ones and perhaps you will find that tomorrow is your day to outperform the market.

Just remember, in the trading world your equity will fluctuate and occasional drawdowns are inevitable. However, I think you will find that if you stop hawking your trading balance minute by minute and hour by hour, focus on your trading process and follow your methodology with the necessary discipline, you will look up to the top left corner of that quote screen at the end of the month or quarter to find that your equity balance has taken care of itself.

CJ

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