The following Trading Resolutions is the opinion of Optimus Futures.
The end of a calendar year is often one of the best opportunities for intelligent Traders to reflect on their Performance over the past year. Trading – like any other business – does not offer a singular package of success that can be instantly deployed. Instead, it requires meticulous effort, periodic improvements and a lot of self-discovery and analysis to post consistent results. Even with consistent results, traders often find that reflecting over past trades will usually yield areas of improvement that, when worked upon, can help the Trader perform even better.
Regardless of how good or bad your trading results were in 2017, entering the new calendar trading year with a handy list of trading resolutions will help you improve as a trader overall. A tidy list of trading resolutions should strike a balance between corrective measures extracted out of past performance and clear-cut goals stemming out of a realistic vision of the full trading year. When done well, this can represent a roadmap as well as a performance checklist that the trader can refer to periodically throughout the year for guidance, remedial actions and most importantly, refrain from repeating the same mistakes made last year. Your trading resolutions will likely be unique to your particular circumstances, but we have compiled a list of general recommendations that, in our opinion, should be a part of your customized list for potentially improved trading performance in 2018.
Log Every Trade
Logging and journaling is an advice so standard in the trading community that it’s almost a cliché now. But that does not make it any less important. Maintaining a well-documented journal that records each trade is perhaps the most critical aspect of trading that is frequently skipped over, even by seasoned traders. Most traders will relate to the exciting idea of initially wanting to evaluate periodic performance through well-maintained journals. Unfortunately, most traders will also refer to the inconsistency that soon disrupts this process as they try and lean back on subjective instincts rather than objective analysis coming out of a trading journal.
It can seem tedious and time-consuming to maintain detailed trading journals, especially for higher frequency traders. But the paradigm changes when you view that effort not as a mundane clerical burden but as an investment into a powerful source of learning and knowledge.
Since trading relies heavily on your mindset, psychology and approach, sometimes the best trading advice is blatantly visible on your track record. Like a mirror to your trading personality, a detailed trading journal will tell you more about your habits – good and bad – that affect your trading results.
From patterns for losing streaks and failed trades, to reflections on soundly managed trades and substantial gains, a trading journal will give you more clues on how to better your trading than perhaps even some of the costly trading courses you would buy from a guru. Whether you already have a trading journal with a patchy record history or don’t have one at all, make 2018 the year you record every trade for the sake of your betterment.
Simplify your Trading
You need to remind yourself that your trading actions and strategy have to be clear-cut and straightforward. In an attempt to refine their edge in the market or improve the results of their trading strategy, new and experienced traders alike are prone to overcomplicating their approach leading to fractured trading performance. Did you add a bunch of additional technical indicators to your charts this year that you find are not very useful at all? Did you ditch your three-point entry checklist for a more lavish 10-point checklist in hopes of landing stronger setups? Did you try and merge two proven trading methods to reap the benefits of both the systems simultaneously? Do you need to write a book to explain your trade management approach or can you succinctly sum it up in a line?
Knowingly or unknowingly, as traders, we are continually pondering over our trading results, actions and strategy. For most traders, this means a slow but steady deviation away from the simplicity that they believe is necessary to be in line with the pros in the market. For inexperienced traders especially, it is very common to go the extra mile to apply significant tweaks to their trading approaches in hopes of better results.
From ditching a moving average crossover system in a sideways period of market action to swinging between highly aggressive and conservative trade management, in the end, the trader is often left with a sporadic and dispersed track record with elements that may have little in common to draw logical conclusions from – or valuable lessons.
Some of the better trading methodologies rely on a simple standout edge in a particular market that proves itself over time. Following a simple strategy is not only less stressful and more comfortable to analyze, but it is also easier to implement with precision with less room for “maybe” and “seems like” type of analysis.
Of course, your strategy, like all others, will require minor tweaks as you apply it to varying market conditions over an extended period. ‘Layering’ your strategy with too many unrelated aspects can quickly shift the momentum towards complexity that may jeopardize your trading performance.
Project your Performance Realistically
Based on a decent sample of past results, one of your primary goals at the start of the new year should be to project your trading expectations for the year. Being as realistic as you can, lay out factors like your expected trading frequency, and a longer-term return target that you aspire to achieve at pre-determined checkpoints in the year (monthly, quarterly, bi-annually, etc). The more organized and planned out your approach is, the easier it will be for you to know the quality of your trading performance at a particular point in the year.
As you try and get over the mistakes you made the last year, it helps to know if the remedial actions are translating into improved performance at all in the new year. Comparing your current performance to pre-set benchmarks is an effective way to achieve this efficiently.
Implement a Risk Management Plan – Another aspect of projecting your performance is to pre-determine your loss limits to prevent your trading actions eroding your account equity to dangerously low levels. This is a critical resolution especially for a trader going into 2018 with a red-inked trading record for 2017.
For newer traders who can be caught up in a negative mindset after a loss, leading to a string or streak of losses, (or in the event of prolonged pure bad luck), it is imperative for a trader to know the risk and loss appetite. This limit, if tested, should set off a much-needed warning prompting the trader to take a break to refresh the mind or analyze recent trading results to pinpoint a possible consistent issue that needs to be resolved. A similar approach will also be needed at a micro level down to the individual trade. Start your new year of trading knowing exactly how much you want to be risking per trade and when to tweak the loss limit per trade, if at all.
Stop-Loss Disclaimer: The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
Commit to Trading Education
Whether you classify as a new trader, an intermediate trader or an advanced professional, setting priorities for your continued trading education is a must – especially as a new years resolution.
Do your due diligence to locate the practical trading resources that will assist you in developing a sound trading strategy and the correct winning mindset and approach. Like any other serious business, trading successfully requires investment in education and training. Do not expect your past results or current performance to teach you all the lessons. Sometimes a refreshed approach to market dynamics and trading from a reputable external source can potentially open new dimensions for you to explore, build more knowledge and eventually transition towards an improved trader. Do not discount the wealth of trading knowledge contained in some free online trading education services. These include popular and high-traffic trading forums, online and social media, trader chat groups etc. These resources are often populated by some very knowledgeable traders willing to share their in-depth knowledge with newer aspiring traders without a hefty price tag. Having said all that, the challenge (an understatement) you will face is to identify those who have real experience versus those who just “talk”, or worse, those who have no trading knowledge and charge to teach you.
Evaluate your Broker
The start of the new year should ignite much hope and spirit in you for allowing you a fresh start as a trader. That spirit can easily be affected if you are with a broker that does not provide a nurturing environment that encourages you to improve as a trader.
With many reputable, licensed and reliable brokers around, there should not be any reason for you to linger on with your broker if you are not satisfied. While you should be pardoning an occasional glitch, if your broker provides consistently poor and useless customer service, disruptive execution, high fees and commissions, or hosts other pain points for you, this is the time you need to make up your mind to switch. Your broker has a responsibility to enable a welcoming, reliable and competent trading environment for you. If your broker shows signs suggesting otherwise, it may be time to take your business elsewhere.
Evaluate your Trading Platform, Technology and Execution
Before you launch your 2018 trading campaign, it might also be a good idea to evaluate your trading platform. While some people prefer to use the charting and trade execution platforms provided by their own broker, others prefer independent charting platforms either because it is superior in some ways to the default platform provided by their broker or because they are already used to a particular platform.
Either way, make it a point to evaluate your trading platform carefully. Glitches in the price feed, poor visual display and distortion, lack of sufficient charting tools and indicators, poor load speeds and execution (in case of using the default platform of your broker) are all matters that require your urgent attention.
With popular, efficient and reliable platforms out there like TradingView, Multicharts, Sierracharts, TradeStation, MarketDelta, TT Trader, MetaTrader and other Optimus Futures Platforms, You have no excuses to be damaging your trading results in 2018 on the back of sloppy platforms.
Consider Automation and Diversify Your Capital
If you are looking to take your trading to the algo/auto trading level, especially as a higher frequency trader, you might want to add this resolution to your list. Platforms like iSystems allow you to explore and apply automated trading strategies with most reputed futures brokers without requiring any direct programming or technical skills at all.
Automated trading allows for distinct advantages over regular trading. Computerized trading hinges on absolute and pre-determined trading rules for entry and exit that eliminate guesswork, emotions and screen time (a computer algorithm will execute and manage trades for you continuously) for the trader.
Automated trading also opens doors to follow multiple markets and strategies that the trader otherwise would not have been able to accomplish if he or she were to make all trading decisions consciously. Automated trading removes human aspects of extreme emotions of fear and greed. If you have a highly objective trading strategy with concrete entry and exit rules, aiming to automate your trading could be a viable resolution for the new year.
We would love to hear your resolutions for 2018 in the comment section below. Please take a moment to register and share with us what improvements you are committed to this year. If you write it out, you will get closer to implementing your resolutions. Even though Optimus Futures is primarily a discount futures brokerage firm, we also take pride in the fact that we provide guidance on trading methodologies as well as the trading platforms that complement certain trading styles. Your feedback below will also paint a picture for us here at Optimus Futures on how to better serve beginner, intermediate and advanced traders. Your challenges will become our goals to overcome.
We wish you and your families a prosperous and healthy new year!
The Staff @ Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
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