Successful Strategies to Increase Performance

Ask yourself these two questions at the end of your trading day and your trading will rally.

When it comes to improving trading performance, I constantly tell traders to ask themselves the following two questions: 1) How did you perform today / this week / this month? 2) How did your trading plan perform today / this week / this month? Because with these two simple questions, we immediately know what to focus on.

You might think: What’s the difference? And if you ask yourself this question, you definitely need to read the whole article. Because it is critical to differentiate between your personal performance and the performance of your trading plan.

In trading as in life, you can only control your own actions. You can't control the market any more than you can control the weather. But you can control your own actions. You can follow your trading process or check the weather before you leave your house.

Actually, you can think of your trading plan as the right clothes for a rainy day. You can only decide if your clothes are working in keeping you warm and dry, if you put them on before you left your house. The same goes for your trading plan: You can only decide if your trading plan is working in the current market environment, if you execute it accordingly. But if you only check whether you got wet and don’t check if you put the right clothes on, then you have no clue if you need to buy new clothes or if you only need to remind yourself to wear the right ones. The same is true for trading: If you only check your P/L-ratio at the end of the day or at the end of the week, you have no clue if you need to adapt your trading plan or if it is more useful to train your ability to execute the trading plan.

Differentiating between your performance and the outcome is also useful for answering another important question: When is the right time to change the behavior and when is it more important to stick to the plan?

Traders oftentimes come to me when they feel stuck. When they think what they do isn’t working anymore. And before I believe that, I need to know how they evaluate their trading performance. You can only say that your plan isn’t working anymore, if you have sufficient data. That’s why journaling is absolutely crucial. Only with sufficient data, you can say that your plan isn’t working anymore.

If you find after a month that you executed the plan perfectly, but your P/L-ratio is still negative, then you have good reason to adapt your plan to the current market environment. However, if you realize that in 80 % of the time, you didn’t follow your trading plan, then it’s your performance you need to work on. And this can be the slightly more difficult part.

Can you follow your plan - even when you are bored, anxious, nervous, afraid, or if you had a winning streak? Can you follow your plan after you had a winner although you didn’t follow your trading plan? To answer these questions, you don’t need much data. You can work on yourself every day and be humble every day. And this is the basis for surviving and thriving in the markets.

Dr. Hanna Hofmann
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