Breaking Through A Trading Plateau
Stuck in breakeven or in a profit range? Here are 7 methods to break the ceiling!
Does your trading progress look something like this lately?
If my amazing drawing wasn’t clear enough, what I meant was:
Do you feel you reached a point where your results can’t get past a ceiling?
You’re executing your strategy consistently every single day and it seems that’s not enough. You wonder if that’s all your strategy can provide you.
The answer is no.
You will have normal moments of a plateau in your trading, they can last weeks or some months, but if you’re experiencing this for several months to a year or years, then something must be done.
How can you break through a plateau in your trading?
In this article, you’ll learn 7 key methods that will help you make more money without changing strategy, market, or trading style.
Before trying to solve any of your trading issues is crucial to know what’s driving them.
What A Trading Plateau Is Not About
Why did you reach a trading plateau'? Are you failing to hold for your targets and taking much smaller wins than you should? Are you holding losers for too long?
Before assuming you've plateaued, you need to be aware if there are any execution mistakes you’ve been making.
If you find this to be true, then you can’t assume your results plateaued without solving your issue first.
This article is for the traders who are continually executing well but whose strategy seems to offer resistance to breaking through a certain limit in profits or even through breakeven.
Sometimes, this resistance is found in your mind… let me explain:
Invisible Subconscious Limit
An invisible subconscious limit is one you hold in your mind about how much money you believe you’re capable of making with your trading.
If you don’t believe you can exceed a certain amount in profits, then that won’t become reality even if you try everything on the outside.
If by “luck” you pass that limit, your subconscious brain will be quick to put you back to “where you belong” meaning, your self-image. You can make profits just to find yourself giving them all back to the market.
You won’t break your trading plateau without solving this mental limit first. How you see yourself is an important question to reflect on. Change starts in the mind. If your belief in yourself limits you, your reality won’t go further.
Grow your self-confidence and surround yourself with people that are making more money than you in their trading and have more experience going through rough periods like drawdowns. Most importantly, surround yourself with people with a growth mindset that doesn’t limit yours, but expands it!
As you work on breaking this subconscious limit, you’ll find it easier to break the trading plateau.
Here are the 7 key methods you need to be using if you wanna get passed the profits limit you’re experiencing:
1. Focus On What’s Working
When we talk about making more money in the market traders instantly think about bigger targets, more trades, and changing stuff about their strategies.
None of these work.
Instead, you need to remind yourself about what brought you to where you are at now.
Many of my clients arrive to me because they’ve reached a plateau. The first approach I take with them is understanding what’s already working. How are they making money already? What type of conditions offers them the best trades? And performance? How did they overcome setbacks in the past and what tools did you use for that? Then, we want to double down on those things by favoring the right conditions.
You don’t want to take more trades, but take the quality ones and make more money on those!
2. Increase Risk On The Right Setups
You’d be surprised how many traders fall in their comfort zone with the amount of risk they use.
If you wanna break that trading ceiling you gotta experience new environments, especially the ones that push you out of your comfort zone.
Instead of overthinking whether you should increase risk and for how much, I advise you to go ahead and make experiments. It’s all trial and error and you won’t know until you try!
I suggest you increase your size by 1% per trade. Try it out for the next 30-50 trades.
The best environment to do this is on high-quality setups or A-setups as many traders call them. If you already feel naturally more confident in these types of setups, you’re more likely to maintain composure if you increase risk.
While the trade is running notice how you feel: changes in your mental state, comfort, and fear. If you can keep the same performance on this period of trial, then upgrade to that amount of risk.
All you’re doing here is finding a way to get out of your comfort zone without compromising your results.
3. Tighten Your Stop-Loss
The question is not “How can I make more money"?” but “How can I keep more of the money I’m already making?”
Capital preservation is key. Before looking to the upside: how to increase targets, look to the downside: how to reduce risk.
If I had a percentage I would give you but all I can say is that I see a large number of traders use bigger stop losses than they need. When we isolate a big sample of their winners, many times the price doesn’t even use 50% of their stop loss. This means that they can tighten it significantly!
I challenge you to do the same: isolate all your winners of the past couple of months and study how much percentage of your stop loss normally gets used. You can even make groups in range percentages and categorize the trades in those.
If you find out that you can tighten it then you’ll be cutting your losers shorter, increasing your risk to reward, and keeping more money.
4. Accurize Your Entries
Is there a way you can get better entries for the trades you’re taking? If so, it becomes way easier to tighten your stop loss.
As you can see guys, for all this you need to be recording your trades. I’m not even talking about the boring data collection (as we all know it is) but at least screenshots with the entries, stop loss, and targets. One image is worth a thousand words. Save your trades, it is the only way you have the opportunity to sharpen your strategy.
5. Leave A Runner
Always leave a runner: a last partial profit of a smaller size that you leave to run.
The idea is to be risk-free after you’ve taken the biggest part of the position out and then, you “forget” about the runner you left.
When you do this with the increased size it works really well. Let’s say you were risking 8 contracts in most of your trades. Now, you increased the risk to 10 contracts. You can leave the last 2 contracts to run with stop loss to breakeven. No pressure or stress. This way you're not closing doors to the possibility of making more money. In the long term, you’ll be rewarded.
6. Get An Outside Perspective
If you're prepared to take this big step and want to accelerate your growth, the best thing you can do is find a mentor or a coach. Having a one-on-one talk with someone who has been in your position before leads to insights that you never considered, and will break new ground for your development moving forward.
A good trading coach doesn’t hand you all the answers on a platter, but the tools and new perspectives you need to find the answers for yourself.
7. Take Some Time Off
If you've tried everything and aren't making the progress you want, it's often best to take your focus off the market.
The bodybuilder eventually gets to a point where he/she is over-trained and the best to do is to take some time off.
The writer who sits in front of his 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 renewed mental energy.
When you return to the screens after a break you will likely have a clear and fresh perspective that allows you to see things you weren’t considering before.
Summary
The 7 keys to breaking through a trading plateau:
Focus on what’s working
Increase risk on the right setups
Tighten stop-loss
Accurize your entries
Leave a runner
Get an outside perspective
Take some time off
Remember that the whole purpose of trading is to survive. For this reason, always look to the risk side before you look at the targets. You want to preserve your capital above all else.
See you next time,
Sara
Next Live Class:
March 11 will be the next live class: “How to break through a trading plateau” in the private community.
We’ll dive deeper into the causes and solutions whether you're stuck at breakeven or in a certain profit range.
As always, this is an open class so bring your questions.
If you want to get an invitation click here.
Whenever you’re ready, there are 2 ways I can help you:
1- Learn to use emotions in trading with my E-Book here
2- Elevate your trading performance with The Peak Performance Trading Program. Fill out the qualification form here.