4 Keys to Breaking Your Trading Plateau

Probably the biggest misconception out there about trading is how easy it will be for a new trader to develop the skills necessary to be consistently profitable. Most people think of skill acquisition as a steady process that will see a trader going from strength to strength, but this isn’t how learning any skill really works.

In reality, skill development involves periods of rapid progression with minor regression, followed by plateaus that can last for days, weeks, or even months. These plateaus can be extremely frustrating for a trader as it feels like their increased efforts are not being adequately rewarded. It’s at this point that those who are not completely determined to achieve success will likely give up. We all know people like that, the dabblers who give something a try for a couple of weeks who then move on to the “next big thing” before giving up again at the first moment of adversity. This cycle continues on and on, and they achieve little if anything in any field.

Trader Learning Curve

To become the type of trader you want to be, you must take a long-term view to your development. It’s crucial that you understand there will be bumps along the way as you progress, but you must remain determined to persevere and push beyond your plateaus to the next level of trading aptitude.  The best traders tend to put in the most effort during periods where they are seeing little progress as they know that they will see that time rewarded down the road.

Key 1: Practice, Practice, Practice

This key is the most obvious is typically the primary path that people take to develop a skill, but it’s also one of the least effective at actually breaking through sticking points.  Practice is hugely important to a point, but eventually repeating the same thing over and over isn’t going to lead to further progression.  Most people use practice to just “go through the motions” without really pushing themselves, and so their improvement is minimal at best.

In order to make practice useful so that you can accelerate your learning curve and break your current plateau, it’s crucial that you keep your practice sessions highly focused.  A trader needs to continually assess their current state of development and their potential weaknesses so that they can gear their practice towards the areas in which they are struggling.

Are you failing to hold for your profit targets and taking much smaller wins than you should?  Are you holding bad trades for too long because you are hoping they will come back into profit even when the market suggests otherwise?  A trader needs to continually ask themselves questions like these and then make a concerted effort to adapt their tactics accordingly during practice sessions so they can improve.  By taking this focused approach small changes can be made that lead to large increases in performance over time.

As traders we are extremely lucky to have powerful platforms that allow us to have these practice sessions any time we want.  With features such as Market Replay in NinjaTrader, there’s really no excuse to not have a consistent schedule of focused practice sessions on a regular basis.

Key 2: Push Beyond Your Comfort Zone

The second key element to breaking your plateaus follows from the first.  If you find that you have been putting in practice time and are not making obvious progress, it may be worth trying something novel to move your trading forward.  Too often we can get stuck in a rut repeating the same motions over and over again which stifles our progress.

Trader Comfort Zone

The human mind is capable of boundless creativity so it’s important that from time to time we embrace that and try something completely new.  This is always difficult at first as we are doing something very unfamiliar and we are likely to make plenty of mistakes.  Over time however, we will develop a small degree of competence in this new area and this increases our overall confidence level.

As traders, this mean experimenting with different tweaks to our methods at times, both large and small.  It’s not about making changes on a weekly basis to our trading system or jumping from one system to the next.  Doing that will only cause a person to regress in their learning curve.  Instead, it’s about experimenting with methods outside your comfort zone so that your trading knowledge as a whole constantly expands.  Even something that doesn’t seem immediately applicable to your typical trading style can pay dividends down the road through improved market understanding and a better decision making progress.

For example, if you’re a scalper who takes very small wins and losses, try some simulated trading where you take a swing trader’s perspective on holding your winners.  Ride your winners through the inevitable ups and down until you hit your longer term targets.  This will likely feel very uncomfortable to you at first, but it will improve your patience and discipline and you might find there are some positives that you can adapt to your day-to-day trading methods.

Big breakthroughs rarely come from doing the same thing you have done a million times – they come from moving outside your comfort zone into areas where you have minimal knowledge.  Don’t be afraid to try something new and you might find that piece of inspiration that pushes you right through your trading plateau.

Key 3: Get An Outside Perspective

Sometimes no amount of practice or creative experimentation will take us to the next level of skill development, and what we really need is a fresh outside perspective.  Everyone has their own way that they see the markets and the actions of others, so it can be extremely valuable to receive this unique feedback from an external source.

As traders, we know that success in our chosen profession is largely dependent on our own decision making process.  This very personal nature of trading often causes us to focus inward and not seek outside help for our trading problems even when we know it’s the best course of action.  We are afraid to admit mistakes and acknowledge our struggles to others because we worry it will reflect poorly on us.

Experienced traders know that acknowledging our sticking points and confronting them is often the best way to progress.  It’s not about being judged, it’s about releasing some of that personal burden and opening ourselves up to advice that will allow us to improve.  By setting aside the ego and accepting that we don’t need to be perfect, we suddenly open up pathways to growth that were previously stifled by personal emotional baggage that was holding back our trading results.

Trading Coach & Mentor Approaches

If you’re prepared to take this big step and want to accelerate your development, the best thing you can do is find a professional trader who can mentor and coach you.  Having a one-on-one dialogue with someone who has been in your position before often leads to insights into your performance that you never considered, and will break new ground for your development moving forward.  It’s important to understand that a good trading mentor isn’t a person who has “all the answers”, but someone who makes you think in fresh and unique ways.  We are all different and have our own perspective on the markets which means that in trading there are few perfect solutions, but having someone with the experience to give a fresh perspective is invaluable and will help accelerate your learning curve greatly.

Key 4: Take Some Time Away From The Markets

Sometimes the best thing a trader can do to develop is nothing at all.  That might sound a bit counter-intuitive, but it’s very important that at times we take a step back and just allow ourselves some time to decompress.  If you’ve seemingly tried everything and aren’t making the progress you want, it’s often best to take your focus off the markets for a while to do some other things we enjoy.

This is no different than development in other areas.  The bodybuilder eventually gets to a point where they are over-trained and the best solution for them to progress is to take some time off.  The writer who sits in front of his typewriter or screen for weeks with a serious case of writer’s block isn’t doing anything productive.  To break their plateau, the best thing they can often do is to walk away and relax so they can come back with a fresh perspective and renewed mental energy.

We need to be careful that we don’t become overwhelmed by new systems, trading ideas, and sources of advice, as this will eventually grind our development process to a halt.  If you get to the point of feeling a bit overwhelmed and you aren’t seeing progress, take some time off and do some things you enjoy that will recharge you mentally.  When you return to the screens after an extended break you will likely have a fresh perspective, the mental cobwebs will be cleared, and often considerable progress will then be made very quickly.

Trader Relaxation Method

Conclusion – Breaking Your Trading Plateau

Breaking your trading plateaus isn’t easy, but if you are focused and determined you will eventually achieve a new level of development that will lead to additional profits.  If you are stuggling it’s vital that you keep your eye on the long-term goal, continue pushing forward, and aren’t afraid to try new things.

Many aspiring traders give up at the first sign of adversity and never achieve their trading goals of consistent profitability and financial freedom, so resolve not to join them.

Keep a realistic perspective to your development, embrace your progression and plateaus, and you will become the type of trader you want to be.

 

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About the Author

Cody HindFounder & Head Trader of Samurai Trading Academy. Cody has almost a decade of day trading experience in the Emini S&P 500 futures and Forex markets. He has also coached dozens of traders, helping them to achieve their financial goals.View all posts by Cody Hind →

  1. Murry ThurmanMurry Thurman05-19-2013

    Great post Cody. No one ever talks about the realities of trading and “trading plateaus”. One of the biggest mistakes I made early on in my trading career was “system jumping” whenever I hit a plateau in my trading results which is absolutely the wrong thing to do. I also took your advice and picked up Brett Steenbarger’s books on trading psychology.

    Awesome material. THANKS!

    • Cody HindCody Hind05-20-2013

      It’s an odd thing, isn’t it Murry? We all struggle with plateaus in our trading development from time to time yet nobody seems to want to mention it. I guess it kind of destroys the illusion of trading being incredibly easy money with little work to get it.

      What you mentioned about system hopping is very common. Most people do the worst thing, which is switching systems right at the low point of draw-down so they are essentially trying to get a fresh start within a pit they’ve already dug for themselves. Since they are now learning something new, an inevitable new low point occurs along with another jump to a new system. And so on and so on, until their account is no more…

  2. David MulberryDavid Mulberry05-20-2013

    Man, trading plateuas are the worst! Maybe you can help me work through mine a bit? Could really use some help after four months struggling.

    • Cody HindCody Hind05-20-2013

      Hey David. Yeah, we’ve all been there as we struggle to get to that next level in our trading. A normal, if frustrating, part of the process sometimes. Just use the Contact page to let me know a bit more about what you’re struggling with and I’ll be happy to do what I can to help.

  3. DamonDamon06-12-2013

    Excellent post. It has taken me a while to break through some of my early sticking points but you are absolutely right on the best way to get to the next level.

    • Cody HindCody Hind06-12-2013

      Thanks, Damon. Yeah, getting through those plateaus always takes a bit of time and effort. Lots of people tend to give up just before they push through, so good to hear you are making solid progress.

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