Recently I went on @ReverseLong 's podcast The Friendly Bear Podcast. You can check it out here if you are interested:

 

-   https://youtu.be/fAGTooipJvs   -

 

Reverse Long is an awesome host/podcaster and an even better person. I highly recommend you checking out his channel - there is some seriously valuable content on there.

 

One of the major points that we discussed was sticking to 1 or 2 setups and ignoring all of the other noise that comes along with trading. As you get more and more into trading you see many different styles, many different Gurus and many different ways to make money. There are a million different ways to win at this game. What separates the 10% that are consistently profitable from the 90% who struggle is 1 word - focus.

This is not to say that some don't have a large playbook and are proficient with many different trading setups but I would guess that most of them followed a trajectory in their trading career something like this: 1.) Newbie mode - trying everything and anything. This is a highly volatile and necessary part in your trading journey. You don't know what you are good at or what you like so you have to try everything. There is usually no avoiding this. 2.) Light bulb stage - you start to find what is working for you through trying many things and tracking your trades religiously. This will allow you to know what you should focus on. 3.) Focus stage / compounding stage - In this stage you have found your setups that you are successful with and you are trading nothing but those setups. 4.) Reversion / wandering eye stage - You start to gain comfort with your main setups and start to try other setups that you have seen in the past or you are finding for the first time. This usually starts with some early success but then backtracking and ending up back to just trading your main setups. 5.) Discipline and focus - This stage is where you will usually grow most as a trader. You have made the mistake of "wandering" and learned the error of your ways. You are back to basics and you are getting better daily / creating good habits. Once you are here, and you have a larger account, this is where you can start to branch out to other setups / expand your playbook...Slowly! The thing that separates this stage from the wandering stage is that you have a framework in place for learning new setups and you are more disciplined as a trader. You are ready now to take the next step and expand.

I would say that these stages do not have to go in order and everyone is different. Some go in and out of these stages multiple times. The key is when the market slows or you start lacking in discipline, you have to revert to what you know best. Also, when learning a new strategy always start small. No matter how big your account is, you should always approach with the mindset of being a newbie - because you are a newbie to the new setup!

I have gone through these stages many times in and out. Currently I am back trying to fight boredom trades and only trade the setup(s) that I am good at. The Pareto Principle or sometimes called the 80/20 rule basically says that 80% of your profit will come from 20% of your trades. This may not be precisely true for every trader because we are all different but the rule roughly stands. Focus on the 20% of your trades / trade setups that will make you 80% of your profit and you will find success. On the other hand if you boredom trade, trade random setups and go into those setups with too large of size - you will find yourself in trouble especially in this unforgiving market environment.

@Team3dstocks aka Alldayfaders on Twitter has a way of controlling this that I really like. He allows himself a certain amount of risk per week where he can take random trades. The amount will be different for everyone but if you think of it in "R" then you can apply it to your trading. Say that you are willing to risk 1R a week on "other" setups. This could be if you are testing a setup or you just have an itch that you need to scratch, this is where you use your "play around" risk. What this does is it allows you to tinker and make trades that you wouldn't normally make while keeping your risk in check. If you lose the 1R, that is okay it is 1 trade to potentially make that back. I urge you to play around with this concept and find what works for you. We are all human and will all make mistake, take dumb trades from time to time. The key is to keep it in check. At the end of the day, you must stick to what you are good at and continue to hammer that until you are consistently profitable. As I say in the podcast, be an inch wide and a mile deep. 

It would be a crime for me not to end with the famous Bruce Lee quote that Reverse Long was referring to in the podcast as well. "I fear not the man who has practiced 10,000 kicks once, I fear the man who has practiced one kick 10,000 times." So get to kicking!