New Year Resolutions for Traders
What Are Your Trading Goals for 2022?
Traditionally, many people make New Year's resolutions. Some promise themselves that they'll eat better, lose weight, behave nicer, stop bad habits, start new habits... You've probably been there done that.
But what about your trading? Have you made resolutions before? Like have more discipline? More patience? Stop chasing trades? Some may even consider quitting trading altogether?
We've heard many of them but likely not all...
Have you ever asked yourself why is it that 95% of retail traders fail? If there's a silver lining in that it's that they tend to fail fast, like on average within 3 months and never trade again.
So what do the 5% of of long term successful traders do that is so different? Is there some secret that they know that others don't? Hardly.... They simply have better risk and trade management principles than most.
I was once taught that if trading isn't boring to you than you're probably not trading properly.
Boring? Hmmmm... at that point I had never thought that trading could or should be boring.
Done properly, trading can be extremely boring and until you experience this phenomenon it's really difficult to explain.
If you've ever hunted for wildlife or fished there are many similarities to trading. You have to be in a certain area, with proper training/credentials/equipment, you have to actually know what it looks like you're hunting or fishing for, you have to stake out an area that you essentially sit and wait for the right opportunity to make your shot or hook-set a fish. And yes, the sit and wait can be boring.
If you look at what traders do vs hunters do you ever see a hunter that's been in the field start shooting at nothing or do they wait for the hunted to come into sight for a shot? If they miss do they keep shooting into thin air? Or how often does a hunter sit and wait hours for "the shot" but then doesn’t take the shot?
In trading these characteristics often translate to:
- Entering Trades Early or Late
- Chasing Trades
- Fear of Missing Out (FOMO)
- Trading Too Big
- Taking Profit Too Early
- Over Trading
- Revenge Trading
- Not Having a Plan...
And the list goes on.
So many times we hear that trading takes patience and discipline and in a sense it does. But more so what trading takes is a process of steps and rigid requirements to adhere to the process. In this case "rigid requirements" often looks like patience to unsuccessful traders. But in reality it's simply requirements necessary to be successful ie. consistent, confident, wins > losses.
So what are your New Year's Trading resolutions? We'd like to hear them.