Costly Trading Mistake #5 (And How To IMMEDIATELY Fix It)
Not Keeping It Simple
Successful traders usually have a fairly simple trade plan based on a few pieces of key information and just one or two trade strategies.
Unsuccessful traders usually have very complex trading plans (if they have a trading plan at all). A successful trading approach should be relatively simple to understand, to identify the trade set-ups and execute the trades. Having a trade plan and strategy that is too complex is related to Costly Trading Mistake #4, too much technology and information.
From The Complex To The Simple
In the 1980's, my trade plan was very complex. I was known as one of the prominent Gann and Elliott trading authorities and released a very comprehensive and complex W. D. Gann Home Study Trading Course in the late 80's. Trade decisions involved dozens of price and time calculations, lot's of chart geometry and complex E-wave patterns.
As the years have progressed and I've learned more, I've also simplified my trading strategy. I look at far less information now than I did 15-20 years ago. Trading decisions for any market and any time frame are quickly made because there are only three or four relevant pieces of information regarding the multiple-time-frame, price, momentum, pattern and time position of any market that are needed to make a specific trade decision. A market is either in a low-risk, high-probability trade position or it is not.
Successful Trading Is Not Easy, But It Should Be Simple
I'm not trying to tell you that successful trading is easy. I am saying that successful traders do not make trading decisions complicated.
I had a customer of my Gann Course from the late 80's who came to a number of my workshops over the years. He was very bright and did a lot of hard work. Each time I would see him, he would describe a new approach or new indicator he was working on or testing and always finish up by saying "one more tool for the trading tool box." Most of his new indicators and strategies didn't really provide any new or unique information he did not already have. He was over complicating the trading process.
I would tell him my objective is to get rid of most of the trading tools and focus on just three or four tools to make decisions. Most household repairs can be made with just a few tools - pliers, hammer, wrench and screw driver are all you need for most simple home repairs. Most trading decisions can also be made with just a few tools. If your trading tool box is too full, you are likely to overcomplicate a situation and make mistakes.
How To IMMEDIATELY Fix The Mistake of Not Keeping It Simple
I'm assuming you keep a trading log that notes the conditions of a market that describe why you took a trade and the outcome. If you don't have a trading log to track and review trades - well - that is another costly mistake. All consistently successful traders keep a trade log to be able to review each trade.
Review all of the information you considered before each trade was made in the last 30 days. Determine which information you considered important at the time of the trade was actually useful for the trading decision. You will probably find that some of the information you thought was necessary before the trade review did not help make a successful trade decision and can be ignored in the future.
After this review, you should have reduced the information you need for a trading decision and the trade strategy to more a more simple approach than you had before the review. All traders should go through this process at least once a quarter for all of their trades.
If you do this review and simplify your trade strategies, you should immediately improve your bottom line.
Take The Time To Learn How To Trade
