It’s that time of year that people start talking about the old year and the new year and their resolutions…but to be fair – most resolutions are kind of pointless:”I’ll do more sports in 2016″ or “Eat less/no chocolate” and all the other classics. It is a bit like saying in trading “I resolve to make more money in 2016”. I know that may sound a bit facetious, but this is a question about objectives, goals and plans in any walk of life so it is important to get it right.
While it is important to have goals and even dreams (my favourite!) in order to succeed, knowing what the destination looks like does not mean you can find the way – especially on your own. It does, however, mean that you will know that you have arrived when you get there – if you are still following me!
Full year objectives should be built from the ground up by using simpler shorter term objectives from the purely financial, like a 27% annual return being made up from compounded monthly 2% returns. it sounds stupid but if you can finish a month saying you have achieved your goal it will be easier to continue in the same vain and surprising how simple the annual goal will become.
Realistically (trading-wise) you might be looking to eliminate some poor traits identified in 2015 when you start off 2016, for example over-trading, or increasing size (scaling-up) too quickly. So, set your parameters, pick some short term goals and be ready to pat yourself on the back at the end of month one after succeeding in those preliminary objectives, don’t damn yourself by setting goals that are too long term OR that are unrealistic.
Personally I find trying to eliminate bad-habits directly to be unsuccessful and so work on reducing either the number of occurences of the offending trade and/or reducing the risk taken in the offending trade. Some examples of these types of trades could be gut reaction trades with tight stops – often getting stopped out by their very nature and can be a heavy bleed if not dealt with carefully (I have always referred to them – in conversations with myself… – as HALO trades – definition here.)
So Happy Christmas from the south-west of France and all the best for 2017! Having a good plan and then keeping to it will help your performance through the calm and through the storms, in trading and in other walks of life!