Every year at Path Trading Partners we review what we have learned from students and our proprietary traders, and we make a list of resolutions. Incorporate these 3 trading resolutions and your path to successful trading will be much shorter and cleared of brush and debris.
- Adopt a process: Not the “Try this one weird trick” process or the “Use this strategy and make $6 million per minute” process that some people offer you, but a professional and consistent trading process that is BASED IN REALITY. Make this the year you treat trading like what it really is; a profession, not a hobby. Write down a consistent, repeatable and reviewable trading process that you can measure and manage. If you don’t know what you put in the recipe, you can’t repeat it and you can’t adjust it. Wake up at the same time, do your analysis in the same way, go to the gym at the same time…if you have consistency, you can find problems and you can correct them. 2016 is the year you leave the “get rich quick” mindset where it belongs, in fantasyland.
- Keep a trade log: Whether you trade once a day before or after your real job, or trading is your only job, you will keep a trade log. Screenshots, notes on why you take a trade, trade entry price, trade exit price and results, will be in your journal. Gone are the days where a trade works one day and doesn’t the next, and you can’t figure out if this was just a normal losing trade (which is part of any trader’s life) or a mistake in your judgment. Gone are the days when you very amateurishly say to yourself, “I’ve seen this happen a lot” but when asked to identify what you’ve seen and specifically how often, you cannot. A trade log is a record of how well you followed your process and, at the risk of being repetitive, “If you can’t measure it, you can’t manage it”.
- Let go of the idea that you HAVE to trade: Traders often say to themselves, “I need to find a trade today. If I don’t trade, I won’t make money.” While this is true, the inverse is also true; if you don’t trade you can’t LOSE money. The key to avoiding “trade-seeking behavior” is to incorporate resolution number 1 and understand that if you’ve chosen to trade, then you have chosen to have losing be part of your life. Losing trades are the complimentary probability to winning trades; one cannot exist without the other. So leave the “I have to make that loss back” and the “I need to make $xxx today” and just do your analysis. Sometimes it will result in a trade and sometimes it won’t, but if your analysis is solid, trust it and it will reward you.
Happy New Year from Path Trading Partners. We wish you health and prosperity in 2016.
Futures, options and swaps trading involve risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results