The 99% Rule
Achieve trading success through consistent execution
In the trading world, there is no such thing as overnight success. Fortunes can be made or lost in seconds, but that definitely can’t be called overnight success. My mantra all along the way was: Trading is 99% consistent execution. This isn’t just another catchy phrase, but my fundamental principle that kept me in the game for over 10 years.
In the following post, I will break it down for you and by the end of it, you will see trading as a different endeavor than what you’re used to on social media.
The Myth of Shortcuts
Everyone wants a shortcut, something that works regardless of the market conditions, regardless of the way you feel or how good your strategy really is. I get how this could be alluring, especially for a beginner. The gurus around the world are tempting you with phrases like:
“Buy my course and you’ll be profitable in less than a month”;
“Get this secret strategy that will work 100% of the time”.
But in reality, nobody has a secret that could be plugged and played into any chart, at any given hour, disregarding the macro-economical outlook and still be profitable. The reality is, traders lose money, they lose consistently and that’s a fact.
Here are two examples of risk warnings broker place on their homepage. Around 75% of the traders lose money. Have you ever asked yourself, if there are so many profitable educators out there, how come the majority of traders still lose money, year after year?
The answer to this is definitely not as easy as it may seem, because, as everything that concerns the financial markets, it depends on multiple factors like: the educator’s skill to transfer the knowledge, the trader’s receptivity, risk appetite, consistency, discipline and the general market outlook.
There are a plethora of factors that can influence a trader’s performance, but we will discuss about this in a separate post. Let’s assume now that you already have a proven edge that returns a certain percentage over a definite period of time.
For the sake of this example, let’s assume your strategy
Name: Opening Range Gap
Asset tradable: E-mini Nasdaq Futures
Trading methodology: The opening range gap is defined in the first 30 minutes of the trading session after the open, you wait for either those levels to get traded to and you trade in that direction.
Risk management: 0.5% of your equity
Results:
For the sake of this example, I’ve backtested this strategy and got 21% increase in my account over a 8 month period, with a 54.55% win rate.
It looks good, doesn’t it?
Understanding Consistent Execution
The whole purpose of the above-mentioned example was to show you what consistent action means. It’s a simple strategy that literally could be applied by anyone, regardless of their experience, but it requires consistency and discipline.
Your edge gives you an advantage over the market. Nothing more, nothing less. The way you trade that edge is crucial in achieving your success, because, frankly, you could have the best strategy at your disposal, if you don’t trade it properly, you’ll end up amongst the 75% of traders.
Here are my best tips on how to achieve consistent execution:
Discipline Over Emotion: Markets are objective in nature and can take a huge toll on your emotions. Consistent execution helps you stay disciplined throughout your decisions.
Risk Management: By executing trades the same way each time, you apply the same risk parameters, which is crucial for preserving capital over time.
Data-Driven Improvement: Consistency will allow you to gather a lot of data about your strategy, like the one that you’ve seen earlier. You can analyze what works, what doesn't, and refine your approach without the noise of erratic behavior.
Psychological Stability: Everything you do outside of trading will impact your decision-making ability and ultimately, your trading performance. You will have to be mindful when it comes to the stress you’re taking upon yourself, especially when you want to perform.
There's No Other Way
The harsh truth is there's no legitimate shortcut to trading success. Here’s why:
Market Dynamics: Markets evolve, change and ultimately price in whatever happens in the world. But the principles of risk management, supply and demand, technical/fundamental analysis do not. Your edge should be evolving with the market, but the core principles of risk management stay the same.
Statistical Edge: Your strategy has an edge because it works over many trades, not just one or two. Diverging from it for one
"sure thing"can erase the statistical advantage you've built.Learning Curve: Every trader goes through a learning curve where they refine their strategy. Consistent execution is part of this learning, teaching you the nuances of your method.
The Next Trade Philosophy
Regardless of whether your next trade is a win or a loss, the approach should generally remain the same:
Post-Trade Analysis: After each trade, review what happened, but do not let it dictate your next move. The result of one trade does not change the validity of your edge.
Embrace Variability: Understand that losses are part of the game. The key is not to avoid them but to ensure they're within your strategy's accepted risk parameters. No trader will have a 100% win rate system. It is literally impossible to be that precise over an extended period of time.
Stick to Your Edge: If you've backtested your strategy and it shows an edge, keep executing it. The temptation to chase performance by altering your approach can lead to disaster.