How to Accelerate Your Trading Learning Curve and Increase Your Largest Profit Days, Part 1

There’s a hidden enemy hurting your trading results. It’s not a lack of discipline, or falling prey to your emotions, or using bad strategies. All those things do hurt, but they’re usually visible and can always be fixed. What I’m talking about is more dangerous.

It’s more dangerous because it’s not readily apparent. And also because it directly affects everything else. So what is this powerful hidden enemy? It’s simply this: being satisfied with your best performances.

Wait, what? Aren’t you supposed to be happy when you do well? Of course you are. And you should reward yourself mentally and emotionally. But don’t linger there. Enjoy the achievement, but don’t be satisfied. Here’s why…

Being satisfied with your best results to date leads to complacency and untapped opportunity. It causes you to not progress rapidly and reach your true potential. And yet the key to surviving your learning curve, and to reaching elite levels of performance if you’re already profitable, is to keep making your ‘best’ better.

If your current best trading day resulted in a net profit of 7 points on the ES emini S&P’s and you’re satisfied with this performance because on most days you barely break even, what kind of motivation are you giving yourself to break through that level and have a 10 or 15 point day? And if you’re not motivated to achieve that, how can you expect to improve?

The Secret to Great Trading Performance

You may be reading up to this point and thinking that you don’t have to always be improving your best performance to improve; you could simply improve by having less bad performances. Very true. But let me ask you a question. What is easier to do, fix your weaknesses or improve on your strengths?

Think about it. What do you find easier to accomplish in life in general, overcoming something that you struggle with or getting even better at something that you’re already good at? I think the answer is pretty obvious. And the answer brings forth an interesting conclusion…

That conclusion is that while elite performers (whether they be top athletes or top traders) definitely do constantly work on their weaknesses, they spend just as much time- if not even more- working on their strengths. This keeps making their ‘best’ even better, and those good performances greatly compensate for all the times they don’t do well.

Let’s take an example. Suppose you’re good at trading intraday trends. Your strengths are patience and a lack of fear of regret. You’ve always had these character traits and they translate into giving you the great ability to hold your winners longer than most people since you’re able to wait and are not always worried about regretting losing the profits. You also have the technical strength of detecting trends early and reading them well. On the other hand, you often over-trade range-bound days because you find all the fake breakout moves highly frustrating, and they bring out the anger in you, which are your natural weaknesses. You also don’t have a good eye for reading choppy days well.

Like most traders, you’re constantly working on those weaknesses. Always trying to control your frustration and anger so that you don’t over-trade and take losses. Always trying to improve your ability to detect and read range days. Now this is all well and good, and you should definitely be working on these weaknesses. But what about your strengths?

Well, if you’re like most traders, you’re not even focusing on your strengths. You’ve taken them for granted and are satisfied with the gains they bring you. But let me pose a question to you. What if you improved your ability to hold trending moves even longer and also became better at detecting them earlier? If in the average month you made 30 points from all the days with trending moves and lost 30 points from all the range-bound days- making you a break-even trader- improving your performance on the trending moves by only 20% puts you 6 points in the green, and suddenly makes you a profitable trader!

Of course improving on the range-bound days by 6 points would also have the same effect, but the point is that it’s much harder to improve that weakness of yours than it is to improve a strength! All things are already aligned in your favor when working on strengths, and this makes a given % improvement easier to achieve. And that makes all the difference.

What the Great Performers Do Differently

The great performers in any discipline naturally understand what I’ve explained above. They definitely always work to eliminate their weaknesses, but they focus even more on accentuating their strengths. They take the more efficient route to great performance.

If a boxer has a great natural right hook, he may work diligently on his weaknesses, but he’ll work even harder on perfecting that right hook. Because he knows that if it’s great, it can win him fights. And he knows that he can make it greater than he can make his other punches, and he can also achieve this feat faster. And if a tennis player has a good forehand, she’ll work a lot on all of her other shots, but she’ll become better overall if she makes that good forehand truly world-class. Because having a bunch of average shots makes her average, but having a killer forehand can win her games, sets, and matches.

So given all of this, here’s what I want you to do right now. Take an inventory of yourself and your trading results. What are your strengths? What key character traits contribute to your best performances? Do you have certain types of market environments that you make more money with? Note all of this down.

In Part 2 of this series, I’ll share with you the strategy I’ve used to improve my trading strengths, and how it leads to faster overall learning (which also helps improve the weaknesses), and to increases in overall profitability.

In the meantime, let me know what you thought of this post! Did it open up your eyes to a new way of looking at things? Or do you disagree with its conclusions? Let’s get a nice dialogue started for the benefit of all.

  • Frawan

    At the moment what is making the big dents in my trading balance are the losses; so much even that even if I doubled the pips in my ‘good trades’, it would still not make up for when I am ‘off’. So my immediate concern is still to eliminate my drawdowns (by always setting a proper SL and never trade emotionally/with high leverage). Once I can at least plug the biggest holes in my bucket I will take your advice and start looking at my strenghts and where I make money. I only have a trading journal for the past 4 months, so I am not sure I have even figured out my strenghts yet, but it seems I have been consistenly profitable on smaller range trading (trading bottoms and tops) with tight SL; and that I have lost more than I have earned trying to trade with/against a trend (mostlye due to letting the market run without proper SL hoping it will turn/retrace, and even scaling up bad trades).

    • There are basic minimum-level fundamentals in any arena that have to be mastered before you can start working on anything else. In trading this is especially true with two things: stop losses and position size. We can’t even begin to talk about becoming profitable before those two basic things are done correctly. So if you’re struggling with these primary general issues, then yes, you have to be in ’emergency control mode’ before you focus too much on anything else. Once those basic fundamentals are in place and are at a point where they’re not completely debilitating your trading, then you can start focusing more on strengths to move you forward into consistent profitability.

      Do whatever you have to do to fix these primary issues. You may have to change your beliefs about taking losses, yourself, and the market. I’ll have some posts in the future that address issues like these.

    • mj

      I think I also agree. We have to plug the dike if that is what will keep us from drowning. However When we know we are good at something we certainly need to press that attribute.

  • B. Foolish

    Although improving on your strengths may be easier the additional reward for the effort may not be. If your strengths are already delivering 95% of possible returns how much effort is needed to get that last 5%. Although working on your weaknesses maybe more difficult mentally and rewards can be significantly more profitable and mentally more rewarding.

    • Thanks for your input; I appreciate your point of view. However from my experience, very few traders are ever getting anywhere near delivering 95% of possible returns from their strengths. Unless they’re already world-class (in which case they got their by relentlessly expanding their strengths), most people are only seeing a *very* small portion of the benefits their strengths can give them. And since the benefits their strengths can give them greatly outweigh what their weak areas can give them, the full 100% of returns from strengths is much larger in absolute terms than the 100% of returns from weak areas. So any given increase in strengths will give them back more absolute returns than an increase in the weak areas.

      Anyhow, just my observations, and I respect other points of view on this matter since it does go against common perceptions. Thanks again for your opinion and allowing me the chance to elaborate further. Dialogue is always helpful in understanding things better.

  • Dan

    Great stuff! When you work to strengthen a skill you predispose your mind to thinking more about that thing your mind is so diligently working on so that you notice more opportunities to utilize that skill which means by default that you’d have less time/opportunity to implement a weakness. It’s kind of like how when you’re predisposed to a bearish market outlook, no matter how many bullish setups you see you look right past them or rationalize them away since you’re sure that the market’s only going to go down; except that in this application of the same type of brain pattern, you should end up more profitable. I also see a corollary to diet and exercise. When I’m in a rest or injury phase and not working out as diligently as normal, I find that I make poorer food choices, being more likely to eat junk food. But, when I’m in a focused workout phase I try to make sure that I’m eating the right mix of foods at the right times. Thanks for the the post!

    • Thanks for the very insightful comment Dan! You’re absolutely right. I’ve experienced the exact same thing myself with respect to exercise and diet. And when it comes to trading, if you’re laser focused and pre-occupied with your strengths, your weaknesses have less of a chance of coming into play.

      Thanks for the great contribution to the dialogue.

  • EasySkanking

    Awesome insight :). A great way of looking at it, I never thought about it this way. It helps alot! Thanks!

    • Glad you liked it! And very happy it helps :)

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