Probably the most frequently mentioned parameter of a good trading account is consistency.
This concept is quite broad and can include various secondary parameters. But basically, it means the ability of the account to bring stable results.
Trading stability can be evaluated using a simple trading history and plotting profit versus time. It is also very convenient to use a monthly period and calculate the account growth for each month. For a PAMM account periods can be divided not monthly, but based on the duration of the trading period.
Thus, each account has its own unique style and behaviour that can be taken into account when assessing a trade.
What is good stability?
The question is actually insidious and at the same time very simple. Good stability is a constant or increasing level of profitability over a period. That is, if the account profitability is 2% per month, every month, for several years, then this is stable profitability. If the monthly profitability of an account ranges from -10% to +20%, then the stability of this account is low. It is important not to confuse profitability and stability. After all, even with great profitability, you can have absolutely no stability and vice versa.
The less stability the account has, the more risky and dangerous the trading style is. After all, the likelihood that a profit will be made in the next period is quite low, while a stable account is more likely to receive the same profitability as in previous periods.
Of course, the market makes its own adjustments and imbalances, which will affect stability. The task that a trader faces is to neutralize risks and balance the trading system.
What about LUX?
The LUX trading system showed absolutely outstanding profitability results in 2022. But this year I did some work on the mistakes and brought stability to the forefront. The result I got was a stable 10% per month instead of quite strong fluctuations. For example, I have attached graphs of monthly profitability for 2022 and 2023. Compare how much more confident a stable result looks compared to fluctuations.
The process.
Increasing stability and achieving consistent trading is a painstaking process that can take years of work. But if you are looking for answers, then I can give you some tips that will help you achieve the desired result.
- Trade only with complete confidence in the result of the trade. Believe me, there will be enough random probabilities in the market without your ones.
- If you start to lose stability, do a trading analysis literally immediately after closing trades. You need to understand the root cause of your mistakes.
- Don’t give in to excitement and don’t try to immediately achieve a stable profit of 25% per month. This will most likely result in losses, even if the short-term result is successful. Your task is to achieve maximum consistency in profits, regardless of its size.
- If you managed to get a stable profit of at least 1-2% per month, then begin to improve your trading system, look for new approaches to determining entry points, while strictly controlling your consistency.
