Avoid Style Drift and become a consistent profitable trader.
How style drift is affecting your trading and how to overcome it?
There are several styles to make money in trading, and each of those styles needs differing skillsets and temperamental traits. Some styles are too volatile while some are relatively calm. Some styles rely on high leverage while some don’t use even a dollar of margin.
Most new traders pick styles from established traders when they start trading. Seeing the success of the established traders, these traders believe that they would be successful with the style from the get-go. Sometimes they indeed taste success, but no style can guarantee profits all the time.
While the traders stick to the chosen style when the going is good, they begin to find faults in the style when they hit a rough patch. The fault-finding causes them to gravitate to other styles of trading that seem to be successful at the time.
The process continues for some time and the trader eventually becomes a “jack of all trades but master of none”.
This is called style drift.
The “why” of Style Drift
The major reason for style drift is the failure to execute one strategy consistently. The obvious factor affecting this could be the conditions of the broader market. The style could simply be not suited to the changed market condition.
For example, a momentum style will not work in a sideways market. When a momentum trader is encountered with such a market, he might conclude that the style doesn’t perform and move to another style that seems to be working at that time.
The other times, the drift is because of psychological factors. In fact, most of what happens in trading is determined by the ability of the trader to handle different emotions.
The drift happens because the trader couldn’t just follow the rules and acts emotionally too many times, concluding that the trading style isn’t best for him.
How it affects trading and why is it harmful
Changing trading styles too often doesn’t let you master any one style and no great has ever been achieved without mastering.