Everyone makes some sort of New Year’s resolution. And, 90% of them fails at following them for very long.
The problem with such resolutions is, they are made because you already have trouble sticking to them, so one more promise is not going to change things for very long.
But if this year was different, what would your resolution be?
The most important “first step” is to set realistic goals. It makes no sense to set yourself up for failure by setting a goal that it unlikely to be achieved. Many of my Students during the training session have Goal of making 50-100% a month but during course of training we try to reflect the reality and bring them to very very close to the reality and helping them succeed.
Do not set a goal to reach a specific profit for the year. Those new to market will most likely set a profit goal of 30% to 40%. Can such profit be achieved? Of course it can, but no one knows ahead of time what kind of markets we will see in 2016, so such a resolution might very well be doomed to failure from the start
We could see a huge bull market, or a bear market. Or we could continue sideways.
So here is a more realistic profit goal. One that can be followed with reasonable expectations of success.
Promise to stick to your chosen trading strategies, so that you can make as much profit as possible, given what year 2016 offers us.If you do not have trading strategy please work on that before plunging yourself in market.
This is realistic. You will make as much as you can, depending on what the markets offer us.
Sticking to the Strategy
We have said this, and written this, so many times. But it is so critical that we must again say it here.
NO ONE makes money in the markets without following a trading plan. A strategy designed to profit by using the ups and downs of the markets to determine whether you are in a bullish or bearish position.
Trading plans are what make the professionals rich. They are the difference between winning, and losing.
And if you trade a plan, you have to stick to it. The reasons you can come up with to abandon a plan cannot be counted. They are so numerous that no article could list them all. And they always feel right at the time they are made.
But there is one sign which will tell you that you are making a fatal mistake. If you are acting on emotion and making a decision other than what your followed strategy tells you to make, you are setting yourself up for disaster.
Trading plans are designed to keep us from making rash decisions are times when the markets are volatile, when emotions are high, when the vast majority of investors and traders are panicking and making mistakes. This is when your chosen plan will keep you safe.
So if you decide to make an emotional exit right at a crucial moment, why did you bother to use a trading plan in the first place? You will be jumping out of the frying pan and into the fire. It’s up to you, but a super New Year’s resolution for this year would be, “stick to the plan!”
Another great resolution would be to avoid impulsive trading.
It is not necessary to trade all the time to be profitable. What is important is to not allow any trade to become a big loser.
This takes us right back to following the trading plan. Impulsive trading is a trait that can only be stopped if you recognize it as a problem. If you are trading when your strategy has not issued a signal, you are likely being impulsive.
Look back at all your impulsive trades of the past. How many of them turned into disasters? How many of them became big losers?
Impulsive trading puts you right in with the majority of traders, and the majority are usually wrong. They are especially wrong at times of high emotions, such as market tops, market bottoms, reactions to news events, etc.
Don’t allow yourself to trade unless your trading plan tells you to. Try to relax and realize that the plan is unemotional, and allowing your emotions to rule will cost you money. The plan will not.
Winning All The Time?
This New Year recognize that losing is a part of the game? Every successful trader takes losses. If those losses cause you to jump ship, you will then be without a plan and riding the emotional roller coaster along with everyone else.
Trading plans keep losses very small. This is what is important, not the fact that you had a loss. Trading plans also keep you “in” winning trades. The urge to take a profit is another reason why market timers act impulsively. Everyone wants to profit, but giving up a big profit to lock in a small one is one of the most common reasons for failure.
Small losses and small winners do not make you successful. Small losses and big winners do. You must stay with the winning trades.
Conclusion and New Year’s Resolution
Promise yourself to stick with your selected trading strategies absolutely. Take those trades when they are supposed to be taken, not after the fact.