Consistently profitable online stock trading requires both confidence and discipline to first achieve a reasonable level of success and then of course to maintain it. For virtually all traders, these two aspects of trading are responsible for their success or lack of it: having confidence as a trader, plus the discipline to stick to their trading system. Most traders that struggle with their discipline do so for a very simple reason and this is something that can be very easily addressed and rather quickly.

Ask any frustrated or struggling trader what their biggest problem is and it will boil down to a lack of confidence and / or discipline in one form or another. Traders who have both are the ones the that are doing fine and enjoying their trading. Even the veteran traders will tell you that the primary reason for any rough spells they have occasionally experienced were from when they had a lapse or breakdown in their confidence or their discipline, but once they got it back all was well.

So how do you go about building these two emotional pillars for successful stock trading? How do you regain them if they\’ve waned?

First thing to do is get clear on where the problem exists.

Most traders make the mistake of automatically assuming that the problem is with them, the person, never stopping to think that you may just be okay, not really doing anything that every other normal person on the planet wouldn\’t do. Nearly everyone assumes (and you know the problem with that) that the system is always okay as it is, never thinking that the system itself could be causing the problem with your execution of it.

Here\’s my 3-Step Performance Clarity ProcessTM to find out if it\’s you or your system, or both.

Step 1. Make Sure Your System Is Properly Documented

Have you documented your trading system? If it is, do you actually USE this documentation or is it a document that sits in a folder (in a drawer on your hard-drive)?

If your system is NOT documented, that is the first problem and then yes, your system is contributing to the problem, and you need to document your trading system immediately.

Ask any Quality Assurance Professional about documentation and consistency and they will confirm a simple truth for you.

FACT: Un-documented activities are the most likely to have inconsistent performance and results.

Step 2. Make Sure You Know Your Trading System\’s Capability

Have you recently back-tested your system to know its potentials?

If you have, and you did a proper job of it, then excellent!

If you have never back-tested your system (as it is now) or you haven\’t recently, then you need to do so ASAP.

FACT: In order to know if your results are less than they should be, you have to know what your system is truly capable of producing.

CAUTION: IF YOU ARE DOING YOUR BACKTESTING IMPROPERLY, THEN YOU MAY ONLY BE GIVING YOURSELF A FALSE SENSE OF CONFIDENCE AND SETTING UNREALISTIC EXPECTATIONS.

Step 3. Compare The Two And Take Appropriate Action

[First things first – if your system is NOT documented, get that done now! As a Certified Quality Engineer, I cannot stress strongly enough how critical this is if you want consistency in your trading. Proper documentation is the foundation of consistent performance and without it, you are only asking for deviations and the resulting costs (losses or missed profits). Once your system is documented properly, then you can continue. If you don\’t then it\’s only a matter of time until problems return.]

Review the results of the first two steps to determine the proper actions to correct the source of the problem, restoring (or establishing in the first place) your confidence, which addresses the doubt that creates the discipline issues.

If your back-test results are less than satisfactory, then you know immediately that there are issues with your system which must be addressed.

If your back-test results are satisfactory, but don\’t match up reasonably well with your live trading results, then this tells you that yes, your execution is indeed the problem.

FACT: Consistency is the most important factor in maximizing profits in any business, but especially in trading.

These are matters that most people don\’t get in their stock market training, yet these are absolutely essential to being able to trading consistently and with confidence.

Coming from years of working in the trenches in Quality Assurance, I\’ve developed a specific process to establish consistent performance for traders.