When people embark on a new diet/exercise plan, it often includes this idea of “cheat days.” That is, certain days where you don’t have to watch what you eat, get to pig out on whatever your favorite food is, or drink more than you should, skip the gym, etc. It’s basically giving a big middle finger to “future you” and saying “I don’t actually give a crap about you, so stick this where the sun don’t shine.” It’s detrimental to your progress, demotivating, and destructive to your plan and to achieving your goals.

Imagine if you carried that thinking into your trading. That on certain days you had permission to “cheat” on your process. To over-leverage. To ignore your stops. To add to losing ideas. To throw all good risk management out the window. Just picture what that would do to your account, and to your future as a trader.

We don’t have the “luxury” of cheat days in trading. If the market is open, we must honor our process. Period. When it comes to a diet, sure, cheat days will slow your progress, make it take longer to reach your goals, etc. They might even eventually ruin the entire attempt and revert you back to whatever behaviors you were trying to get away from. But in trading, any cheating on your process, will always come back to bite you. And it will bite you hard.

This is where blown accounts are born. It’s where the 95% of traders who fail, tend to go. We don’t get days off from process. We don’t get cheat days. We have to honor and adhere to our process every single day, at all times, period. There is never a break from this. If you intend to have a 40 year trading career, then that’s over 8,000 days without taking a single one off. Without cheating even once. Because if you let it happen once, it can happen twice, and if it can happen twice… well I’m sure you see where this is going. There’s only one conclusion, and it involves you never getting to trade again. Oh and possibly going bankrupt, losing your home, your loved ones, your friends & family, etc. Sure not in every case, but to ignore that very real possibility, would be foolish.

So, let’s all make a pledge to our future selves, that we care about them immensely, and will do everything in our power to ensure that we don’t screw everything up for them. That we will honor our process – their process – and make sure they still have an account to trade when it’s their turn. And we can look forward to the day, when we look at our stable equity curve, and say, “Wow. Thanks Past Me!”

Until next time, good trading!

Jonathan van Clute
Community Manager, Trading Research Group