As we come to the end of year you’re all hopefully spending some time to review the prior year and plan the upcoming year.
Maybe you’ll even make some New Years trading resolutions!
The following five steps will assist in making better plans and resolutions; hopefully allowing you to stick to them beyond the 2nd of January.
1. Conduct a Review
You might already have a review process in place. If so, follow your current plan. If not, it can be as simple as asking yourself questions and providing some honest answers. The following questions from a prior YTC article may offer a good starting point:
- Am I enjoying myself?
- Have I achieved my trading goals? Why? Why not?
- Are my trading goals still relevant?
- Is my trading plan current? Does it accurately reflect how I trade?
- What is the strongest part of my trading plan? What can I do to improve it?
- What is the weakest part of my trading plan? What can I do to improve it? What can I do to minimise the risk or impact?
- What is the area of my trading plan that I haven’t really developed to its fullest potential?
- Do I really know whether my plan provides a positive expectancy? How do I know?
- What is one thing I could do right now to improve my pre-trading preparation?
- What is one thing I could do right now to improve my identification of setups?
- What is one thing I could do right now to improve my entries?
- What is one thing I could do right now to improve my trade management?
- What is one thing I could do right now to improve my exits?
- What is one thing I could do right now to improve my post-trade review process?
- What is one thing I could do right now to improve my record keeping?
- What is one thing I could do right now to improve my longer term reviews (weekly, monthly, biannually)?
- What is one thing I could do right now to improve my discipline?
- What is one thing I could do right now to improve my consistency?
- What is one thing I could do right now to improve my trading psychology?
- What is one thing I could do right now to improve my money management?
- What is one thing I could do right now to improve my risk management?
- What do I fear most in my trading?
- What am I embarrassed to talk to others about when discussing my trading?
- What was the low point of the last six months? What will I do to prevent that reoccurring?
- What was the high point of the last six months? What will I do to ensure that repeats again in future?
- How do I plan to improve in coming months?
- What are my current life goals? What are my current trading goals.
2. Forgive Yourself for Past Failures
This is a massively important step that is omitted from most attempts at goal setting or New Years resolutions.
Learning to trade is damn hard. Most people never make it. And those that persist until they get it usually require several years.
Success is elusive; seeming always so close but never quite appearing. Setbacks and failures are a part of this learning process.
So why beat yourself up all the time, when these setbacks are a normal and expected occurrence. It just doesn’t makes sense.
The fact is, the only expectation you should have is for ongoing progress over longer periods of time; not for achievement of any particular outcome. So, have you progressed at all over the last 12 months, even in just your trading knowledge and experience? Most likely you have. So consider the year a success; forgive yourself your failures (they’re part of the game); and forgive yourself your false expectations.
Again review your answers to the above questions, and forgive yourself for your past failures.
Let them go!
Clean the slate for a new year of progress and advancement, unchained from the burden of past regret and disappointment.
3. Set Process Goals for Future Success
The answers to step one should also provide you with a number of areas for potential improvement. We need to turn these into goals.
There is information all over the internet on how to set SMART goals.
But what is missing from this common advice is something much more important.
In addition to an outcome goal, be sure to set process or action goals.
That is, focus your goals on the steps to achieve your objective, rather than just the objective itself.
Instead of just setting a goal to improve average monthly performance by x%, set a goal to allocate 15 minutes in your post-review session to identifying the particular trade sequence which offered the most unachieved profit potential; reviewing your trade management decisions; and identifying ways that you could have perhaps improved your decision making.
Work on the process… and the outcome will look after itself.
4. Limit Focus – One Key Area at a Time
Don’t spread yourself too thin. Focus deliberately on one key area at a time.
See this article for one simple approach to focused learning:
5. Share Your Goals With Someone Who Will Keep You Accountable
Scary…. but effective!
We easily rationalise our own failure to follow our goals (or new years resolutions). But it’s much harder to do so when you have to report your progress to someone else.
Choose someone who will be non-judgmental, but also who you absolutely do not want to disappoint. Your mother or your spouse are an ideal starting point.
Now do it!
Block out an hour or two… whatever you can afford… and work through the above five steps. Do this and you'll increase the likelihood that in another twelve months when you look back upon the year to come, you’ll once again see progress despite all the new setbacks and disappointments, and you’ll be able to consider this year a success.
Happy New Years Resolution Setting,