Adapting for Traders

A trader must learn to adapt while on his way to becoming a professional trader, and when he is enjoying his career as a professional trader. Not learning to adapt is one of the many reasons traders fail. Some of the considerations for adapting to changes are:

When traders choose a mentor, they must adapt the way they trade to their own resources.

I know of several teacher/mentor traders who are extremely good and have accumulated a great deal of wealth. If a trader has only ten thousand dollars and tries to emulate a trader who has deep pockets, he could lose his small trading account very quickly.

Tina became a student of a world-renowned trader. She was exceptional at everything she did in life and this gave her the confidence that she would succeed as a trader.

When she started to study with her mentor, she was blown away by his knowledge, support and his interest in her as a student. Her mentor said to me that he was amazed that she learned everything that he had to teach. The only problem with Tina’s trading was that she only had fifty thousand in her trading account.

Within six months Tina lost everything, even though she followed the rules of the strategy perfectly. She told me that after she lost the money, she continued to monitor the system and had she started to trade at that time she would have earned two hundred percent on her money.

When the environment of the markets is not good for earning a profit with your strategy.

A trader must understand what makes his particular strategy profitable. With this understanding he can set a contingency for what to do when it does not work.

Ronald was a profitable trend follower and understood that when news was dramatic he could take advantage of the swings in the markets. Ronald told me of a summer that the trend was so minimal that if he continued to follow the rules of his strategy, he would have only made money for his broker.

His contingency plan for this situation was to use a momentum strategy on a 1-minute chart with a 2% risk factor. This worked so well for him that he continued to trade this strategy even when his trend following system would have been once again profitable.

When there is a disruption in a trader’s life that grabs at his emotions.

Life is full of events and circumstances that can disrupt a trader’s ability to trade profitably. Relationship, health, financial and other issues have been the demise of many traders.

Buck was a consistent trader for many years. Even the problems of every day life never disrupted his flow until his son and wife were seriously injured as a result of a drunken teenager driving through an intersection on a red light.

In between hospital visits Buck would try to get his mind off of his anger, worry and sadness by trading. When he had a major drawdown from a trade he took that went against his rules, the markets became his enemy. Buck lost all the profits he had gained in a year.

When a trader no longer has the energy to trade an 8 hour day.

To be a consistent trader you must have energy time. This is the time when you are fully alert, well rested and healthy. Traders make their biggest mistakes when they do not have vibrant energy when making decisions.

Sean traded professionally for 20 years when he realized that he could not keep up with his normal 12 hour days in the markets. He reduced them down to 8 hours, and he felt like he was on vacation. The funny consequence was that he earned a higher profit. I suggested he cut it down to 4 hours. The profit remained the same and suddenly he made commitments to his family where excuses were the norm.

Conclusion

A trader needs to know that his career as a trader will require him to adapt to many situations to continue to be consistent. If he allows himself to adapt to changes that are necessary, he will more likely enjoy his retirement as a part-time trader who is still earning a good profit.

Adrienne Toghraie coaches traders and investors to their next level of success by helping them overcome their self-imposed limitations. She has been a keynote speaker since 1989, author of 13 books, and owner of TradingOnTarget.com.