No Home Run Trades? Grind Out Base Hits!

I’m sorry about this, but I’m going to start this week’s post with a bit of a bummer. My month-long hot streak unfortunately came to an end on Tuesday with a $3,000 loss, and it looks like I’m going to finish January without a single +$10k day.

But here’s the good news, I am poised to end the month with a net profit of nearly $50k! That’s $10,000 higher than my average daily goal of $2,000. While you might chalk that result up to a few stand out trades, keep in mind that only four of those days saw profits above $5,000.

Of the 19 days I’ve trades so far this month, I turned a profit on just 17 of them (I didn’t take any trades on one of those green days). This means I made about half of my January profits from only 13 days of what I consider pretty typical trading results.

So how did I end up with an above-average month from a collection of relatively average days? In a word: consistency.

You can credit the green streak for that. But what makes consistency such a powerful asset has less to do with profits and more to do losses.

That comes up in my market recap for Tuesday. At one point in the day I was actually up about $2,400, despite starting with a $1,000 loss in Boxlight Corp. BOXL. But because I had made more than $8,000 the day before, I stayed in too long, got too aggressive, and I paid for it with my green streak.

The real secret behind beating your own expectations is focusing on profitable trades. Any successful trade is good, even if you’re just barely clearing your commissions or fees, since they increases the buying power of your cash account and just feel good. Profit will vary based on a lot of factors that you may or may not have control of, but what you do have absolute control over is how much you lose in taking risky positions or revenge trading.

Had I walked away on Tuesday, whether it was with $2,400 or after I gave up those profits and broke even, I would still be lossless in 2019 and I might have reasonably ended with $55k or even $60k on the month. Instead, I’m leaving the month a little on-edge, wary of starting a negative streak heading into February.

All this is to say that a red day costs more than just the raw dollar amount. It cuts into most day traders’ profit potential and can wreak havoc on your perception of the market. Some red days are inevitable, even if you trade as cautiously as possible. But losing consistency and failing to manage risk can turn even a successful trader into a washout.

If you want more insight into my trading strategies and a privileged look into some of the tools I and other Warrior Trading students use, I’ll be hosting a live Webinar next Monday, February 4, at 1 pm ET. Click here to find out more and sign up for the event.

Disclosure: Warrior Trading is an editorial partner of Benzinga.