I know of no more encouraging fact than the unquestionable ability of man to elevate his life by conscious endeavor.
Henry David Thoreau

SMB has a developing trader desperate to improve. In a merciless 2009 he traded very well comparatively. This quest to improve is not unlike that of an unprofitable trader hungry to just start breaking even. This journey is no different than than the average trader desiring to become very good. So how do you improve?

Let’s start with what doesn’t work. So you are underperforming and you want to get better. Too many new traders scrap almost everything they had been working on and try something completely new. This is the worst thing you can do in most cases. Let’s break this down logically. So you’re an inexperienced trader and have left one style of trading for a completely new system. The reason you are most likely underperforming is your lack of skill development for a particular style. Why are you exchanging a lack of experience with some patterns for even less with others?

Those that are underperforming often think if they just learned something new. Almost always it is: if I just learned some more technical analysis then that will make the difference. Maybe but probably not. Trading is about making set ups your own. For every new play or pattern you learn you must 1) make that pattern your own and then 2) develop the skill to trade that pattern well. It is better for the new trader to first ask: Am I in all the patterns that make sense to me and I crush ? Or am I missing some of these set ups? What can I do to ensure I am in more of the opportunities that are in my sweet spot? And then how can I trade these set ups with more size?

Often traders seeking to improve should focus on the patterns that make sense to them. What patterns are best FOR YOU? Learn the nuances and subsets to these plays. You will make the most progress by becoming better at these plays and patterns that make the most sense to you.

Now it is true that sometimes patterns that work one month will not the next. And we must always be searching to add plays to our playbook. But to do this takes time. When you spot a new pattern that makes sense to you start trading it with small size. It will take experience, practice, tweaking, and time to master this set up. For this new set up there will be subsets and nuances to master. Keep working on expanding your playbook because one market might overvalue the trading skill for this new set up. But keep your losses small while you are learning.

Also generally it is not that a pattern that makes sense to you must be scrapped. Often that pattern must just be tweaked. Focusing on completely new patterns often is an overreaction.

Further it may be the case that your patterns do not work anymore. Micro-scalping in this present environment may be too difficult for most new traders. Stepping in front of big bids and offers used to be a go-to-play at some firms and should have been deemphasized in 2004. Rebate trading, adding liquidity and getting “paid by the market” now is only a sustainable trading style for HFTs. If your patterns are obsolete as defined by your trading stats, then move on.

Trading is about learning what you do well and leveraging this talent. How do you find more of these patterns that make sense to me which I crush? This can increase your results 300 percent,  as opposed to spending an inordinate amount of time learning a new pattern that might add one percent to your P&L after you master it. Search for these new plays but understand it’s the plays that make the most sense to you presently that will present opportunity for your biggest improvement.

Best of luck with your trading!