If you turn on the television, open a website or social media, or grab a newspaper (a daily or weekly publication carrying everything from the latest news to in depth reports, usually produced locally) you will see a lot of year in review type stories. Most popular #hashtags of 2015. Top Ten Reality Television surgeries of 2015. Most liked hipster beard of 2015. Best cat selfies of the year. You get the idea.
All of those things may be entertaining, and perhaps even important to some people. It’s not necessarily my cup of tea. But it does remind me to review things from previous twelve months, and I am a fan of that. The slow holiday markets present the perfect time to look back on your trading.
What worked?
Pull out your statements, and narrow down your best days or best trades. Try and find the common factors between those trades. Make a note of those factors and reinforce them for yourself. Sometimes our best trades aren’t always winners; a well managed losing trade can often be worth more than a winner.
What didn’t?
Do the same thing with your bad trades. What got you there? Was it a bad trade from the get go, or poor exit strategy? Was it too much risk or overtrading? Same as with the winning trades, find the common denominators, and concentrate on avoiding them in the future.
Your Plan
Review your trading plan. Assess your risk parameters. Are your short term and long term goals sensible? Make sure you are setting trading goals you can handle without stressing yourself (and those around) out too much. If you are trading with an account size of $10,000 you shouldn’t be looking for exorbitant returns. Don’t be afraid to take small winners, they add up. Five trades locking in $200 over the course of a month equals a 10% return on your money, that’s pretty darn good.
On the flipside it’s not a bad idea to make sure you are not risking too much; per trade, per week, per month. Set a loss limit ahead of time, and be willing to stop trading and revaluate your plan. The quickest way to stop losing money is to stop trading. Step away and take a breath when the time calls for it.
You probably won’t see #reviewmytradingplan trending any time soon, and it might not make any Best of Lists for 2015. But if you are trader, and hoping to continue doing so, you might want to add it to your list of things to do before year end.
Happy New Year!
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
