Even a Blind squirrel finds nut sometimes

Once in a while, a blind squirrel will find a nut - Anyone can achieve gains in trading through luck and randomness but only sometimes.

If you have a random approach to trading you may get winning trades and maybe even some big ones, but there are good chances that you may have to take huge losses. In short you will not achieve consistent returns over time.

Our goal as high performance traders is to achieve consistency in performance.

Developing a trading strategy gives a trader an edge in trading and helps achieve consistency in performance. What is a trading strategy? A trading strategy is a set of rules applied on charts which do not change or deviate and help trader to make wiser decisions and remove emotions out of trading.

I believe that if you are in the markets without a trading strategy you are floating aimlessly. In short you are working haphazardly with a random adventure.

There are two secrets of high performance traders. One is that they have a trading strategy with an edge and second is the ability to consistently execute that strategy.

A trader journey usually starts off by watching media channels, reading financial dailies, reading several trading books, visiting trade seminars, following traders whom he has never seen or met in his life and spending lots and lots of time looking at his charts in the hope that he can find something magical in them which would ultimately lead him to the riches that he has always desired in his life.

Despite doing all these activities the trader finds out that success in trading still evades him. It is now that he slowly begins to realize the missing part in his trading, the lack of a trading strategy.

So, why does the fact that a trader needs a trading strategy occur to him only after he has exhausted all his other options for successful trading? Why does not any trader realize that the trading strategy is the most important component of his trading and so it should really be the first thing that he thinks of when he decides to master the art of trading?

The answer lies in the emotions of the trader.

When almost anyone starts trading he wants to enjoy the independence and the freedom that it gives him to do what he wants, to not follow the rules, to be free from the restrains of his job, to be free from the strict office hours and the other rules that bind him in his office. So, when he begins to trade, he wants to do what he wants to, he wants to trade when he wants to, he wants to buy and sell and be the boss which he always wanted to be.

But alas, in trading, like in an office, there are rules to be followed. Discipline is needed to follow rules and they need to be strictly followed else the market will penalize you for indiscipline, just like in an office. These rules are the trading strategy and the need to follow rules is what displeases all traders.

When they enter into trading, they do so thinking that they can enjoy the life of no rules. But when you tell them that they have to again follow rules in trading as well, the mind just cannot accept that fact. It is totally contrary to what trading was promised to be and so the mind finds it difficult to realize that the trading business also needs rules.

The market is the boss. You do not tell what it needs to do; the market does what it wants to.

The market is like a river which flows the way it wants to. So, as a trader, you need to think and put in rules and follow them so that you can get the best out of it. Just like how you put dams across a river so that you can control and use it for drinking purposes and also for electricity generation.  Like this, you need rules and checkpoints to take control of the market and ensure that it gives you what you want, the successful trades and the money. If you don’t follow rules, it will flow as it wants and will wipe out everyone in its way, including you.

“Without a trading system you are floating aimlessly in a sea of opportunity with no land in sight” – Mark Douglas