Stop trying to be a home run hitter

In Baseball there are home run hitters and there are players who get a lot of hits. Usually the two are not synonymous meaning the players who hit the most home runs are usually not the same players who get a lot of hits. However , in baseball getting on base 3 out of 10 at bats could get you into the hall of fame. Hitting home runs is great of course and something many people strive for but , some people are just not home run hitters. In fact , your chances of getting into the hall of fame are greater by getting hits than they are getting home runs.

This same concept applies to trading as well. When people first start out they tend to try and go for those "home run" trades. Trying to turn $1,000 into $10,000 in a month. While this is not impossible to do it is HIGHLY improbable to achieve.The problem here is that a new trader who is trying to turn a little into a lot will usually take on excessive risk and poor money management techniques in order to try and improve his bottom line. Sure he may get lucky a few times and have some good winners with this but eventually the market will teach him a lesson and he will likely lose all his capital.

  If you think about it another way and go for the "base hits" you will more than likely achieve greater results over a longer period of time consistently which is really the name of the game. Anyone can have a few lucky trades but being able to stay the course for the long term is something very few can do.

Here is an example to illustrate this point:
A trader with a starting bankroll of $1,000 going for a 5% weekly goal  will have turned that $1,000 into $12,643 by the end of year one.

If the trader were able to consistently maintain this strategy for 2 years he would have transformed his original $1,000 into $159, 843( due to the power of compounding) ....not bad for 1% a day right?

The problem is that the trader wants the $159,843 RIGHT NOW! Not in 2 years.....hence why 90% of traders lose over time. 

To do this the trader must set a daily goal of 1%. 1% of $1,000 is $10  a day . That should be fairly easy to do. $10 is a 2 point movement in the YM , NQ  or 6B ( $6.25 )  contracts. ( not including commissions.) This is also is a little less than a 1 tick move in the E-mini S&P futures contract ( $12.25 per tick)

The issue is that traders get greedy , they win one they keep going , they win another one they keep going even after they have hit their targets until evetually they hit a streak of losers and give it all back to the market. When you hit your goal for the day you are DONE for the day.

Discipline , money management and controlling your emotions are the keys to the trading kingdom while strategy plays a very small role.

1% is easy to do but the catch is it is also easy not to do. If you want to make it in this business you have get consistent in order to be successful.

Happy Trading!