Trader’s New Year Resolutions

2014 starts with Jitender Yadav’s valued contribution. He writes..
Year 2013 has ended and this is once again the time when most of us make resolutions for the New Year for our betterment. Some will promise to join gym for good health while some will commit to drive carefully and the list for resolution will go on. Here are some of the examples of promises a trader can make to himself/herself to get better at trading:

1.I’ll trade in the direction of trend only:

“Don’t fight the trend.” “The trend is your friend until the bend in the end.” Such axioms are often quoted by technical experts. The concept of “don’t fight the trend” is a very simple idea: If you’re going in one direction while everyone else is going in the other direction, you’re likely to get crushed.

2.I’ll risk only what I can afford to lose:

Stress of risking sacred money meant for paying bills etc. causes us to make irrational decisions. We will not see things clearly under this stress. A typically trait of a trader under these circumstances is to take quick profits and let losses run. They don’t want to take a loss, since they can’t afford to lose it; and even more afraid to face it.

3.I’ll let my profits run:

Trail your profits by moving the stops in the direction of your entry and many a times you’ll be amazed to see the huge gains that a trending market can give.

4.I’ll cut my losses/follow my stop loss level:

This is one of the most important rules to make money. In the words of legendary trader Ed Seykota, it’s actually three- 1 Cut losses, 2 Cut losses, and 3 Cut losses 🙂

5.I’ll diligently keep records of my trading:

Trading is a business and like a good businessman we should keep all records related to it and all the more so because a successful trader has to first know himself better to trade better and he/she can do so only by keeping records like a trading journal, a psychological journal recording thought process, taking screenshots of traded charts, etc.

6.I’ll continue to learn about trading by reading books attending seminars, workshops etc.

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln. Read books, blogs etc. about trading, share ideas/thoughts with other traders.

A trader can hugely benefit by keeping all or even one of the above resolutions. So let’s see how many of us can keep the above resolutions, and more importantly, for how long!

Wishing you all a very happy and profitable new year 2014!