Why Traders Fail to Follow-Through on Trading Plans
Hopefully you have a trading plan. If not, you are missing out on one of the most helpful tools you can have a as a binary options trader. Your trading plan should include your trading method, your money management rules, a trading schedule and checklist, your goals, and more. Read more about creating a trading plan here if you do not already have one. But what if you do have a trading plan but you just cannot seem to stick with it? It is incredibly common for traders to create brilliant plans, set achievable goals, and then sit on their hands. It can be deeply frustrating to find yourself in that position, unsure how you can find the motivation to follow through and start winning.
There are a number of reasons you may be failing to follow through on your own trading plan. Before you can start trading according to your plan, you need to identify the particular reason or reasons that you are not succeeding. Then you can set about making adjustments that will allow you to be more successful. Let’s talk about the possibilities so you can get back on the path to winning trades.
1. Your plan is broken and/or not worth your time to begin with.
When a trader is not following through, many people will assume right from the off that the problem is with the trader, and not with his plan. But sometimes we have good reasons for not acting on our trading plans. Oftentimes we may not be entirely aware of what those reasons are, but our intuitions steer us away time and again.
Maybe you know your trading plan is broken. Or maybe you only suspect that it is really not going to work—and correctly so. In either case, it is important to ask yourself whether your plan is relevant and has a solid, tested basis for success. If your trading plan has no data backing it up, then it really does not make the slightest sense to trade your plan. If however you have backtested and demo tested, and your plan has demonstrated reliable success, then likely your problem is caused by something else. If your trading plan is broken, here are some tips for fixing it.
2. You are suffering from performance anxiety or other types of fear.
There is sometimes a huge divide between the state of mind you are in when you write your trading plan and do your testing and how you feel when you actually are ready (or so you think) to trade live. In fact, you may not feel ready at all, no matter how prepared you are. Trading live is like taking a test you have studied and studied for. No matter how well you actually know the material, you still are going to fear failure. And when money is at stake, the fear of failure is multiplied tenfold.
This gap in your mindsets can lead to performance anxiety, especially if you have had poor trading experiences with real money in the past. You can get skittish and have an irrational fear that your new methods are not going to work, even if they have tested successfully. What can you do about performance anxiety? Oftentimes you just have to charge through it. If you let it determine your behavior (by stopping you from trading), you will never start building up positive experiences that help you to overcome your anxiety.
3. You are easily distracted.
Sometimes it is tough to stay focused on trading. For all the variety in the market “landscapes” that show up on your charts, there is an element of tediousness to trading. It is a repetitious task, and much of your time is literally spent waiting for something to happen (whether you are currently in a trade or not). That is a mindset that allows all kinds of distractions to creep in, internal and external.
Externally, you can be distracted by your environment, by other events in your household or in your life, or even by inferior setups. These things promise to break up the monotony, but they tend to lead to losses. It can be tempting to violate your trading plan just to stop waiting—but that is a mistake. Internally, you can also be distracted by your own wandering thoughts and anxieties.
4. You simply lack discipline and need to work on that first.
Finally, some binary options traders really do fail to follow through on their trading plans because they are poor at following through on all manner of plans. Few people are born with natural self-discipline, and even those born with the inclination toward it have to undergo a challenging process to develop it to its fullest. So do not get too down on yourself if you are failing because you really are at fault. You are just at the beginning of your trading journey, and you need to do some work to develop self discipline in order to get the most out of your trading plan. Need some ideas for developing this trait? Read more about cultivating discipline.
A trading plan is only useful if you put it into action. Otherwise, it remains nothing more than an elaborate daydream which you have detailed in every respect. It is common for novice traders who want to be serious traders to mimic the behaviors of serious traders. They make a trading plan because it is a box on their checklist, and they can mark it off and move onto the next one. But you cannot become a serious trader just by going through the motions—not when that leaves you unprepared for the next step.
Make a trading plan not so you can have one, but so that you can put it to daily use. If you are not using it now, start by asking yourself if it is because the plan is not viable. If your plan is tested though and shows every glimmer of success, then it is time to examine your emotions and whether performance anxiety, distraction, or a simple lack of discipline is standing in your way. Only after you conquer the obstacles within will you be able to conquer the markets.