After knowing the three previous simple steps to increase your trading profits, let’s continue our discssuion about the next three.
The simple steps to increase your trading profits consistently:
Step 4: Evaluate the Adjusted Trading Strategy
Now it’s time to evaluate whether your trading strategy adjustments match the trading strategy rules. A trading strategy is usually structured with basic principles and market phenomena. Incorrect adjustments to the logic of the strategy often lead to worse performance.
For example, you use a scalping strategy that utilizes fast price movements over a small-time. It balances a low percentage of wins with sufficient trading frequency and strict risk management.
Let’s assume there is a trader who continues to worry about the number of transactions that the trader must continue to take in 1 trading session. Thus, he decides to implement this strategy for a larger time. He expect that he will get more time to make a decision, and handle the amount less trading.
Adjustment of these strategies might cause losses because scalping strategies take advantage of price movements in a small time. A more appropriate modification is possible by maintaining the authenticity of the system as a method of scalping and adding signal filters and tightening market entry criteria to stop more general trading arrangements.
Step 5: Test the Adjusted Trading Strategy
After evaluating an updated trading strategy adjustment, it is time to test your daily trading. However, before you try it on a live account, you should try it on a demo account first so you can see the results before you test them in real trading.
Then, you can record the performance of the adjusted strategy with unmodified previous results of the strategy. If the trading process is done in the right way, you will see a noticeable improvement in your trading results. If the results are unclear, or even worse, you may need to readjust differently and then retest.
Step 6: Understand, Repeat, and Improve
One of the requirements as a successful trader is to trade consistently and carry out continuous analysis of their trading methods, trading strategies, and mindset. Moreover, if you change your trading strategy and give better results, it could be a reason for you to increase your energy and time making this a habit to more quickly adapt to market changes.
According to Investopedia, to get proficient at implementing a method, practice it, a lot. But, it must be remembered that the process of adjusting the strategy is important, and not just making any adjustments. Although you can change many small things in your trading strategy without reference to the results, there are usually no significant changes to get the best results.