August 28, 2020

How to Develop Trading Drills

How to Develop Trading Drills

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What are some good strategies to practice as trading drills to help improve your real money trading? 

For ideas to enhance performance into consistent habits and practices that have an impact on your trading you first must define your edge. Fully understanding your edge that creates profits comes before any plan for structuring repetitive deliberate practice to improve your trading skills.  

There are three parts to trading drills:

  1. Creating the right behaviours that focus on making trading your edge your natural automatic response. 
  2. Eliminating the bad behaviors that cause you the most losses of money, energy, and time. 
  3. Practicing doing more of what has worked for you in the past to make money. 

The first step is defining what your edge is in the markets and then quantifying the skills you need to improve to help convert them to a natural mental muscle memory and habit. Your trading skills should be your default setting. Once you have your system quantified and know your entries, exits, and position sizing you should not be straining and deciding to make a decision you should be instantly executing inside the parameters of your trading plan.

All traders have different methods and will benefit from different drills to practice their edge. A scalper might want to practice speed of identification and trade execution on a demo account while a trend trader might want to practice letting winners run and cutting losers short on historical data going day by day on past charts.

Trading drills should not only be practicing doing the right things but should also include learning to stop doing the wrong things. Having trading data can really help you drill down and filter what mental errors cost you the most money. If not cutting losses in the past was expensive you have to develop a way to practice cutting losses over and over again until that is just what you do every time your stop loss is triggered. A demo account setting or going bar by bar on a past chart can help you practice this over and over again. The goal is to stop thinking about following your trading system when coming to a signal crossroads and just act instantly to follow the plan. 

You also want to practice doing more of what made you the most money in the past. If it was letting a winner run with a trailing stop or locking in profits when a price target was reached then that is something you need to practice doing when the market is closed so you automatically do it when the market is open and real money is on the line. 

Following your trading system should be something you do automatically not something you have to decide to do for each individual signal. Practice until you are no longer an emotional decision maker or a gambler, but instead a business manager of your trading system. 

Trading drills can develop trading skills. 

How to Develop Trading Drills