11 Resolutions for 2011
Every year millions of people are making New Years resolutions and most of them are not even kept beyond the first week. For traders, resolutions are very important, or at least the establishing of new goals and expectations of one's self in lieu of the trading year ahead This vastly important to the improvement and sustainability of one's trading career. So, I've gone through all my trades of the past year, both good and bad ones, and have a number areas that I believe that I can improve upon. Some of them you may think, "I can't believe he struggles with that!" or perhaps you may have expected goals with more in-depth meaning. Fact of the matter is, often times what traders struggle with are so simple in nature, that the only thing that stands in the way of avoiding those bad habits is one's self, in the form of discipline.
So here are my goals or resolutions, should you call it that, and we'll see by year's end how I faired in each of these areas.
1. Do a better job of keeping winners from turning into losers. Reviewing my trades from the past year, I had a number of trades that I held on to longer than I should have, and as a result ended up taking a loss that should never have happened. The main reason for this being that small profits were being overlooked, with the expectation of something bigger, and in the end I had a number of trades that could have been closed at a profit, albeit a small one, but much better than the loss that was the eventual outcome.
2. Exercise more! I've spent too long in front of my computer blogging and trading, that it has taken a toll on me physically - not so much from a weight standpoint, but from being in shape. I hate running, but I do enjoy sports like tennis, basketball, football, and others - and need to treat this as important as my daily trading plans - because the state of any one's physical health can grossly effect their trading ability without even knowing it. Exercise helps keep the mind sharp.
3. Practice more precision on my entries into trades. I've put in a lot of safeguards last year to enable me to do a better job, while I'm never going to be perfect, I can avoid the bad trades by being a little bit more disciplined in this area.
4. Avoid stocks that have a less than desirable setup, simply because of its "high-Flyer" status. I found myself at times last year justifying certain trades because of the recent past returns on those stocks, and the euphoria surrounding them. Namely AAPL, BIDU and NFLX. Treat them just like any other stock, and avoid getting married to the name.
5. Avoid hedging due to market uncertainty, particularly with ETF's (SPY, QQQQ, etc.). Rather focus on current positions and manage/reduce risk in the portfolio where it is necessary. Hedging with these market ETF's can create more good than bad.
Here are the remaining 6 resolutions.