Grading your trading

Over the years, I have developed an evaluation system for futures traders. I use this rating system to help traders, I coach, in the Electronic Trader Mentoring Program to upgrade their trading.

I present "grading your trading" here as a basis for defining where you are in your trading and to help you establish your trading goals for 2009.

Once you have determined your skill level, from A to F, you can work to upgrade your trading, one grade at a time. Rating your trading based on your skill level and working to advance to the next grade is a better way to establish trading goals than only making monetary goals. Rigid monetary goals may be too easily achieved in a good year and not achieved at all in a difficult year. By focusing on enhancing your trading skills and your consistency, your trading profits will naturally improve.

My grading system starts with the failing grade of "F" and advances to modest improvement as a "D" trader. I estimate that 75% of all traders are in these two categories.

Only 25% of all traders who attempt futures trading advance to become "C" traders. These traders have a chance of meaningful success, although they are not there, yet.

10% of traders advance to become "B" traders and only 2% of traders, in my grading system, advance to become "A" traders.

What grade are you?

Grade F traders lack a plan, lack discipline and do not know where to go to find either. "F" traders encompass a majority of all futures traders. They buy a surefire system that doesn't work. Then, they join a chat room that doesn't help. They copy other traders and look for the great setup that will make them rich. They claim to have discipline only to lose it when things do not go their way. They are searching for answers, but they do not even know the right questions to ask.

Grade D traders have a plan that they do not consistently follow, setups that they do not always take and rules that they often violate. "D" traders are traders who realize that they need a plan, that they need rules and that they need discipline. But they do not consistently follow their plan, stick to their rules or live within the discipline they set. I estimate 25% of all traders are in this category. Trading for these traders is not only unrewarding financially, but it is unbelievably frustrating.

Grade C traders have a plan, are usually disciplined, and are able to pay their trading expenses from trading profits. "C" traders have surpassed 75% of all traders. They are able to hold their own in their trading account, but they have not yet developed their trading to the point where they are able to make meaningful, consistent profits. This is the gateway to trading success. Once you can beat the market and pay your trading expenses, you can work on your consistency and, over time, you can build your trading size, so that you can move forward to the higher grades.

Grade B traders have a well-developed plan, are well-disciplined and are able to make consistent profits. "B" traders are an exclusive group. They have a well-developed plan that they execute without fear and without hesitation. They understand risk and always keep their downside discipline. The major skill they lack that keeps them from moving from being a "B" trader to an "A" trader is the ability to fully exploit opportunities.

Grade A traders represent only 2% of all traders. These traders are set apart based on their ability to fully capitalize on opportunities while holding to their plan and keeping strict discipline. "A" traders are those few traders who not only have a solid foundation of trading - robust setups, clear trading plan, downside risk management, but they have the key ingredient to meaningful success in futures trading.

They regularly exploit opportunities. These greatest traders in the world are defined by how they "press" their advantage. The secret to this highest level of futures trading is exploiting opportunities by the trade, by the day and by the year.

Do not despair if your honest assessment grades you lower than you predicted.

Just know that you need to work toward becoming a better trader. You do not need to worry about what you will need to do to become an "A" trader. Instead, just concentrate only on moving to the next grade. Once you reach that grade, and only then, work toward the next grade.

In this way, you will be working toward improving your trading in a measured, logical way knowing that to become a "B" trader you must first master the skills of a "C" trader.

I can help you advance in your trading during 2009.

Traders in the Electronic Trader Mentoring Program will tell you that you need a trading coach. I am that trading coach. Simon Townshend, a successful British hedge fund manager with whom I work described the progression in trading and the advantage of using a mentor/trading coach when he said:

"Less than 20% of traders are profitable. Probably only 5% are really profitable and probably only 2% are consistently really profitable. To join the 2% club is not easy, but it is possible. However it takes all three of those elements mentioned earlier - the right strategy, the right discipline and the right top class mentor. Certainly you can reach the 20% mark without the latter provided you work hard enough. But however good your strategy and your discipline, the 2% club will almost certainly elude you if you are working alone. That is why Tiger Woods does not work alone and why the top traders all have mentors and buddies working alongside them too. Fortunately for me I searched and found a mentor that is perfect for me. Fortunately for you, you know his name and he could well be that perfect buddy to propel you too into that exclusive 2% club."

Contact me if you would like to make upgrading your trading your #1 New Year's resolution for 2009.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
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