Trading Resolutions for 2020 – Part 2
Trading Resolutions for 2020 – Part 2
In previous articles, we have spoken about the need to review our trading performance from 2019. Before putting together our trading resolutions for 2020.
We identified two key components to collect data on before making any decisions. The first was in relation to our ‘Trading Statistics & Financials’ which we talked about last week. The second was in relation to our ‘Behavioural & Psychological Statistics’ which we are going to expand more on this week.
The first component from last week was pretty black and white. It was all about crunching the numbers. We either made money or we didn’t. And this was generally dictated by our win percentage, combined with our win/loss ratio which then provided us with a profit factor. It’s what I would call the dry mathematical statistics of our performance, and they cannot be disputed.
Behavioural and Psychological
The Behavioural and Psychological side of things can be more subjective if we allow it to be. Especially if we haven’t been taking honest notes post the closing out of each trade we took in 2019. So, to take away any subjectivity, we need to document our behaviours accurately for each of our trades.
- Did we take trades that didn’t align to our trading methodology?
- Did we ever trade impulsively due to FOMO?
- Did we fail to plan the trade then trade the plan?
- Did we act impatiently?
- Did we trade too large and position size incorrectly?
- Did we micromanage ourselves out of trades and not follow our strategy?
- Did we spend too much time staring at the screens?
- Did we panic when trades moved against us?
- Did we manage risk recklessly to avoid getting stopped out?
- Did we jump in on trades too early before a price pattern formally triggered?
All the above behaviours align the psychological side of trading. Where one slip up can put a huge dent in our trading capital.
What each and every one us need to work on in relation to the above is ZERO tolerance. It’s a mindset and discipline that needs to become second nature. You follow your processes without fail. And you come to an understanding that you have no idea what the markets are going to do from one day to the next. So don’t take actions thinking that you do.
Having losing trades is not the issue. Not following your strategy is.
So, if there is one resolution you need to adhere to in 2020, it’s to follow your strategy without fail. And to always track your performance for every trade if you haven’t been doing so previously. Both financially and behaviourally.
