5 ways to improve your trading today

Markets are complicated. Market analysis is complicated. Developing a trading system certainly can be complicated. But trading cannot be complicated. The act of placing trades and evaluating results must be as streamlined and simplified as possible. Here are a few suggestions for things you can do today, with investing an enormous amount of time and energy, to improve your trading or investing. Chances are that you are already doing some of these things, but can you do them better?

1. Make sure you have an edge. I hate to keep coming back to this, but it matters. Furthermore, most things most people do do not actually work. Are you certain your methodology has a statistical edge in the long run? You will make two piles of money from your trades: money you win and money you lose. Are you certain the “money you will win” pile will be bigger? If not, develop and test a methodology until you have confidence in it.

2. Keep good records. Your broker statement is not adequate. You need good records of why you took a trade, what you saw when you took it (or what conditions triggered an entry), how the P&L developed, what decisions you made once you were in a trade, etc. Don’t make this a daunting task; if you create a system that is onerous you will not follow it, so you have to strike a balance.

3. Work on your process. Do you have an established process for finding new trades? What markets to look at, when, how, and what will trigger an entry? How about for evaluating existing trades? When to take partial profits, when to tighten stops, when to exit, when to add, etc.? You can’t be consistent unless you have a defined process you follow each and every time.

4. Think about how you evaluate your results. The conventional wisdom is that we should evaluate our winning trades, but that might not be right. Do you know how to tease out the impact of luck in your results? Do you know how to evaluate the stability of your edge? These things matter far more than looking at charts of winning and losing trades you made.

5. Work on yourself. Though I’m often critical of trading psychology (believing that correct trading has a much clearer impact on psychology than vice versa), there is no doubt that regular exercise, living from a conviction in the abundant bounty of the universe, working on impulse control, being connected to friends and family, and practicing conscious gratitude lead to a happier and healthier you. Consider adding some of these to your daily process, and always work to get better.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 6 Comments

  1. Markus

    Regarding your first point “Make sure you have an edge”, do you think it is simplistic or naive to say: “I have an edge because I trade only the 1st and 2nd pullback without momentum divergences on a certain timeframe in line with the movement of the next higher timeframe, and Adam Grimes et al. have shown with statistical evidence that pullbacks have an edge”?


    1. Smiddywesson

      My two cents:
      Trading is about making money, not developing elegant systems or being clever. If this edge tests out to have a positive expectancy, and you are comfortable with it’s drawdown profile, fantastic. I’ve heard an awful lot of winning traders say “keep it simple.”
      PS: I kinda think there’s not much difference between an edge and a filter, that’s all semantics, what makes money decides that discussion. However, the problem with using filters as an edge is they tend to accumulate and deprive you of an adequate number of setups, leading to psychological problems and lack of discipline.

      1. Adam Grimes

        I think there is a tremendous difference… a filter is just a tool to point to possible trading opportunities. An edge comes from the end result of everything you do. Maybe it is just semantics, but I simply think of a filter as a tool.

        1. Smiddywesson

          No, you are correct, without a scientific postive expectancy, there’s nothing for the filter to enhance. Stating that the bottom line is money just muddies the waters.
          love the site

          1. Adam Grimes

            thank you for your thoughts and participation. you make good points!

    2. Adam Grimes

      Perhaps, but I’d prefer you have your own work to show that edge. don’t trust me or anyone else.

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