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Video on The Trader's Guide To Key Economic Indicators

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The Trader's Guide To Key Economic Indicators
Brian Mcaboy
Your bottom line results are primarily the result of what YOU do, more so than what the markets do. There are traders making money every single day, so pointing your finger at the markets is just an excuse. If you want consistent profits, then be more consistent in what you do in your trading.
A good starting point is to understand is that trading is a process. That's why having a good trading system is so vital. If you truly desire to make improvements in a process, and especially when your objective is achieve greater consistency, the three steps below are ones you can take to have the biggest impact on your consistency.
Step 1. Clearly detail and document your system. One of the more common errors that many traders make, particularly regarding consistency is that they don't take the time to make sure their system is well-defined and written down.
If you regularly engage in an activity that isn't written down, there will probably be inconsistencies in how the task gets performed. The reason the military is so big on procedures: they insist that things be done in a standard, reliable and predictable manner. The same thing goes for your trading.
Step 2. Analyze your system's critical aspects. A smart person once said that for you to improve anything, you must begin by first measuring it. In what other way are you to know if you're actually improving? With trading you have several calculable aspects that determine your bottom line, along with the all-important your account balance at the end of the month.
Most every business has certain aspects that directly affect the profitability of the business. Savvy business owners know to track those aspects and assign metrics to them. The reason that these are so important is because through a calculated analysis of these factors, it becomes very clear specifically where your opportunities for improving your system are.
Step 3. Tweak your system through meticulous actions. Once you've conducted an analysis of your system, you can now focus on those particular aspects of your system to improve it. By having a method for this analysis, you can modify your system and test - with zero risk - either through back-testing or in a demo account and determine the true impact on the system's performance - and if there are any trade-offs.
To give you example, suppose you run the metrics on your system and find that your winning percentage is currently 48%. You've got an idea on how to improve it to 53%, which you "think" would increase your overall returns. Next would be to run the analysis on the system with the change on real market data. By looking at the results, you can see if this change accomplished it objective, but also if there were trade-offs in other aspects of your system performance, such as a lower profit-to-loss ratio. You then can make a calculated decision on whether you should incorporate the change or not.
Summary. Trading is a process from which you wish to have consistent - and reliable - results. Spotting, entering and executing trades is an activity that you repeat on a regular basis, so consistent profits is your desire, focus on making your actions consistent.
Step 1 is to make sure that your system is defined and documented. By clarifying your system and then documenting it, you improve your likelihood to repeat what you do consistently.
Step 2 is to measure your trading for a baseline of where you are now versus where you want to be. This also gives you insight into your opportunities for improvement.
Step 3 is to track these metrics and make improvements in a meticulous manner and keeping your risk very controlled.
There are a handful of metrics regarding your trading system that have substantial impact on your bottom line. Through analyzing your system's performance and purposefully focusing on these metrics, you give yourself the best means to increase your profits. Also, this will dramatically improve your ability to consistently produce profits.
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