Instantly Improve Your Trading: 5 Key Steps

Would you like to become a better trader? Or would you like to improve your trading? In this brief article, we recommend 5 steps that can instantly improve your trading (and investing).

Step 1: Backtest

Readers of this blog should be no surprised that the first step we recommend is to start backtesting. How do you know if you are on the right track if you have not backtested your trading strategy?

We believe the number one reason why most traders fail is that they don’t have any positive statistical edge. No money or risk management rule can ever help you turn that deficit around.

If you have not done it yet, make sure you backtest all your strategies. If they are not specific to put down into quantifiable trading rules, then skip it (unless you have a trading journal that backs it up).

Step 2: Trade many different markets

There is power in automation and mechanical trading, and make sure you use it to your advantage.

Stop looking for the single best trading strategy, and instead utilize the power of diversification and non-correlation. Make sure you trade different time frames, different asset classes, and different market directions (long and short). Yes, short strategies are both hard to find and trade, but adding just one or two can improve your overall portfolio a lot (is it possible to make money shorting?).

Strategies that complement each other might be much more useful for your portfolio of trading strategies than the one with the best equity curve.

We have covered all these aspects in our Money, Risk, and Strategy Management Guide:

Step 3: Know yourself

It often sounds a like a cliche, but it’s true that if you don’t know your strengths and weaknesses, you