The struggle to become a consistently profitable Day Trader is just like dieting.
First a short story: I’m barely 5’8”. Currently I’m right around 148lbs which is a good healthy weight for me. Several years ago, my metabolism slowed down. The amount of food and red wine I consumed didn’t. Next thing you know I’m 178 lbs. I was fat. I felt like shit. So on one random January 1st, I decided to go on a diet. It was my one and only New Year’s Resolution that year. I lost some weight quickly in January. That’s always the easy part, just like beginner’s luck when you first start trading. Then, I put some back on. I lost it again and then right back up. Up and down more times than I can remember. At the end of the year, I was basically right back where I started at 175 lbs. Miserable and mad at myself for wasting an entire year on the healthy living front.
Another January 1st rolls around and another resolution to make it happen. This time was going to be different though. I swore to myself I would figure it out and stick to my resolution. I knew this meant I couldn’t just do the same thing I did that past year because that obviously didn’t work. I had to figure out how to lose the weight and keep it off. I had to find something that worked for me. No more excuses. Time to just do…
Then it dawned on me. I realized it really came down to math. Calories in versus calories burned. Simple. Why didn’t my brain figure this out sooner? I started tracking my calories in a food tracker. OMG! The number of calories I was actually putting into my body was almost DOUBLE what I thought I was consuming. I had always kind of counted calories but I never tracked each and every one. In a sense, I had always done the math in my head. Wow, was I WAY OFF. No wonder I couldn’t keep the weight off. What the food tracker told me was I wasn’t being honest with myself. This was my ah ha moment when it came to my health as I was getting a bit older. I haven’t looked back since other than eating and drinking too much around the Holidays…
You’re probably asking yourself what in the hell does this story have to do with day trading and 2018?
It’s that time of year again when most people start with their New Year’s Resolutions. Come tomorrow morning, we get to start over. A new year. A fresh start. Out with the old and in with the new. Draw a line in the sand and begin again. Dieting is one of the top resolutions for many. Working out is another and usually connected to the dieting and eating healthy/healthy living resolutions.
Many Day Traders approach the new year the same way. Tuesday morning your P&L is at ZERO. I encourage the exercise and talked about it last year at this time. Please read that HERE if you haven’t already.
2018 will be the year I ____________________________________________________________________________.
Regardless of how you fill in that blank, I suggest following through and actually making it happen comes down to one thing.
MOST struggling traders KNOW what they SHOULD be doing: stick to their process, follow rules, keep emotions in check, never average down, etc. They just can’t seem to do those things consistently. Just like most people trying to diet KNOW what they should and shouldn’t be eating. I know I shouldn’t drink an entire bottle of vino tonight with dinner and then chase it all with a pint of Vanilla Chocolate Chip Häagen-Daz. Just like years ago I KNEW I shouldn’t have kept adding to my $AKS position.
Day Trading is the exact same way. You can read all the books and study all the charts you want but in the heat of the moment, if you can’t control yourself, NONE of that will help you. And what makes day trading so freakin’ hard (just like dieting) is that you have to control yourself every minute of every day. One #WTF trade on a whim can set you and your account back hours, days or even weeks. That’s no different than reading a diet book and then eating a batch of brownies.
I’ll be right back, I suddenly want some brownies...
Seriously, I stopped typing and made these. I’m a little off the wagon right now and only have until tonight at midnight to enjoy this crap----------->
So, when you’re making your list of Day Trading Resolutions this year, make sure you include a way to hold yourself accountable. How do you do that? Well, that depends on you. What worked for me and has been working for many others? The EXACT same thing I needed to get my healthy eating on track. A tracker. Something to do the math for you. Yep, just like tracking my food intake helped me take off the weight and keep it off, my trade tracker did the exact same thing for my trading results.
The food tracker showed me everything I put into my body. Every single calorie. The food tracker proved to me that it wasn’t THE DIET that failed. Rather, it was my inability to actually follow the diet. I failed the diet, the diet didn’t fail me. And by the way, the food tracker was extremely time consuming and a huge pain in the ass to fill out. Guess what? I was worth every single second of effort.
Same thing with my trade tracker. It’s a pain in the butt to fill out every single trade, every single day. Years ago when I finally committed to it like I did my food tracker, I quickly learned that my trading process worked WHEN I actually followed my process. Just like my diet worked when I followed it.
Cheat on my diet = gain weight.
Lie to myself on my food tracker = gain weight.
Lose self-control in terms of shoving things into my mouth = gain weight.
Cheat on my day trading process = red P&L
Lie to myself on my trade tracker by not being honest about what I did = red P&L.
Lose self-control in terms of throwing darts and taking random trades = even more red P&L.
My trader tracker shows me every little detail about every single trade I place. As long as I’m accurate and honest about what I put into it, it gives me the brutally honest truth in return. That’s how I hold myself accountable every single trading day. That’s how I stay in control of my trading. That's how I quickly adapt to changing markets. And that’s how I make my New Year’s Resolutions happen every year.
Why couldn't I have figured this out sooner? It always boils down to math!
So, regardless of your Day Trading and/or LIFE resolutions for 2018, do yourself a favor and make sure you figure out how you’re going to stay in control and hold yourself accountable. Otherwise, those great sounding 2018 resolutions of yours? They’re just words.
Happy New Year everyone! 2017 was an amazing year and I’m going to do everything in my power to make 2018 even better. I hope you join me along the way. If there’s anything I can do to help you with your resolutions in 2018, just reach out.
Thanks for reading!