As I mentioned at the top of our 2017 Infomercial, there are several things I love about this time of year. It’s the time of year when you can reflect on what was and relive some of those great memories. For me, it’s more about looking forward. I want to make 2017 even better than 2016! If you’re the same way, I have some advice on how to make 2017 even better, so keep reading...
You need a plan or a list of “Trading Resolutions for 2017”. Just thinking and hoping 2017 will be better probably isn’t going to work. In fact, I can almost guarantee you that it won’t. Do nothing and you’ll be in the exact same spot next year. You must come up with a plan, implement the plan and stick to the plan. Sounds easy, but for many it can be difficult.
In this spirit kicking off the New Year on the right foot, I’ve been talking to a lot of traders these last couple of weeks about how to approach their brand-new year of trading. I’ve been helping them develop their lists of personalized trading resolutions. I thought I would share the highlights from some of these conversations and offer out my thoughts, ideas and some best practices.
This conversation needs to be different based on whether or not you’re consistently profitable. If you ARE consistently profitable, congratulations and I’ll talk to you at the bottom of this page. For those are aren’t consistently profitable yet, here we go:
First let’s talk a little about what your plan should NOT look like. It should not start out like any of these examples:
*I’m going to make $50K in 2017!
*I’m going to make 6 figures in 2017!
*I’m going to make twice as much in 2017!
If that’s your “plan”, good luck because that’s not actually a plan. Day Trading is a process. You must first work to develop and follow your process. Finding "your edge" along the way. THEN and only then, will the $$$ will come consistently. Putting some dollar goal in front of you when you haven’t made any money yet and/or even lost money last year puts way too much emotional and psychological pressure on yourself. It’s great to have a $$$ goal in mind and strive for that goal. However, you need to concentrate on the process of HOW you’re going to make that $$$.
You need to dig deep and figure out exactly what’s standing in your way. You need to write these things down on paper or at least type them into your computer. Then you need to come up with small but actionable plan on how you’re going to fix each of these issues.
Please don’t write down a list of 100 things. If you try to fix too much at the same time, you’ll end up fixing nothing. Start small, you can always add things later in the year. Figure out what the top 1-5 things standing in your way are and concentrate on those.
Let’s quickly talk about an example. Several people mentioned that they are “holders and hopers” - meaning they don’t sell a position when it goes against them/they average down/they can’t honor their stops/etc. So, the first thing on their list needs to be STOP HOLDING AND HOPING. ALWAYS HONOR YOUR STOP.
Then write down a plan of how you’re going to stop holding and hoping. For some, I suggested putting in a hard stop immediately after entering EVERY trade. If you can’t trust yourself, let the computer do it for you.
The other thing you must figure out and concentrate on is WHY you are holding and hoping to begin with. Are you afraid of admitting you’re wrong? Are you afraid of losing a little $$$? You must dig deep and be honest with yourself. Please understand that figuring out the emotional reason behind this and any trading issue(s) is the true key to becoming consistently profitable and breaking your bad habits.
For those of you who aren’t sure of your top issues and what’s holding you back from being consistently profitable, identifying those things needs to be first on your list. This may be the only thing on your list for right now: FIGURE OUT EXACTLY WHY I’M STRUGGLING. How do you do this? Analyze your trades for the last week, last month or even the last year. What kept you from making $$$? This is where keeping a trade journal and/or trade tracker will help you tremendously. In fact, I know of MANY traders who’s #1 resolution for 2017 is FILL OUT MY TRADE TRACKER DAILY. That’s the only way to get to the root of all your issues and to figure out once and for all what’s standing in your way.
Again, the “hold and hope” is just one example. A few other real-life examples from traders include: STOP CHASING. NO MORE FOMO. HONOR MY DAILY LOSS LIMIT. STOP TRADING DURING LUNCH AND CUT MY POSITION SIZE DOWN IN THE AFTERNOON. Figure out what’s standing in YOUR way, write it down and come up with a plan to fix it.
For those of you who ARE consistently profitable, here’s my advice on entering a new year:
Don’t do anything stupid. Don’t reinvent the wheel. Stay the course and continue to build on your strengths. I’ll use myself as an example. My #1 resolution for 2017: HOLD MORE SHARES FOR LONGER. As good as I’ve become at scaling out (relative to where I used to be) this is still a HUGE issue for me. I know this because one of the many things my trade tracker tells me is how much $$$ I leave on the table with every trade. Now, I’m not doing anything drastic and I’m still going to sell some after the first move and protect my entry right away. What I’m going to be concentrating on is the 2nd third and 3rd third – holding those parts of my positions for longer. I have a 5-point plan on how I’m doing this but I won’t bore you with those details now. Just want to give you an example.
Another example and my second resolution is to slightly increase my share size on my BEST A+ Set-Up. I made more $$$ last year trading GAP PLAYS than any other set-up in my playbook. So, on certain GAP PLAYS I’m increasing my share size. This along with my #1 Resolution will have nice impact on my P&L in the upcoming year.
I hope these two examples inspire you to come up with your own. Copy them if they seem like they would work for you. If not, come up with your own. Whatever you do, don’t be complacent. Continue to work and strive to be better.
Now that both groups or traders have seen some examples of resolutions, let’s briefly discuss sticking to you New Year’s Resolutions. The statistics on people’s success rate sticking to their resolutions sound A LOT like the stats on the percentage of Day Traders that succeed. I read one post that said only 8% of people achieve their New Year’s resolutions. Most seem to have it around 20%. That’s still way too low. This is exactly why you need to keep your list small and actionable. The last part of your plan needs to be how and when to follow up and track your progress. You must hold yourself accountable. Otherwise, all of this is for naught. One of the best ways I’ve found to do this – share you plan with someone else who can help keep you on track. There’s nothing wrong with asking for help.
In summary, you need a specific plan and you must stick to the plan. Wishing, hoping and merely thinking about 2017 being a great year isn’t going to get the job done. You CAN do this. You CAN make 2017 the year you’re finally consistently profitable. 2017 CAN be the best and most profitable year you’ve ever had. Let’s make it happen!
Last thing I’ll say today: HAPPY NEW YEAR TO YOU AND YOURS. If there’s anything I can do to help you become a better trader in 2017 than you were in 2016, please reach out.
Here’s to a happy and prosperous New Year. Now, let’s go make some $$$.