Trading is a business and what is crucial to running a thriving and sustainable business is the practice of focusing not only the trading results but also to reflect on the broader operations of the business.
During the quiet period leading up to the New Year, there is no better time than now to take some time off and do a post-mortem of the year as well as spend this invaluable time to plan for the coming year.
In this post, I will share some reflections that I got into the habit of doing each year.
This process was inspired by some of the immeasurable writings over at Dr. Brett Steenbarger’s Traderfeed blog.
The yearly review should consist of a review of all facets of trading.
The review needs to include a daily P/L summary and performance metrics, such as average win size, average loss size, win rate per trade and per day, breakdown of P/L by strategies and trade types, etc.
Your review needs to also flag the greatest winning and losing trades of the month, quarter and year.
Beyond the normal trading metrics I find it useful to also broaden the scope by incorporating some of these into the yearly review and planning process:
- What were the greatest sources of opportunity during the past year?
- How well did you take advantage of that opportunity?
- What were the greatest sources of risk and threat during the past year?
- How well did you navigate those?
- What were the main goals that were worked on during the year?
- How would you assess your progress and areas for improvement still outstanding?
- In the coming year, what readjustments do you need to make to ensure improvement towards your previous goals?
- What new or daily strategies will you layer into your trading?
- What are the anticipated opportunities during the coming year?
- What are some of your goals and daily strategies to be employed in the coming year to monetize that opportunity?
- What are the anticipated risks during the coming year?
- What are some of the goals and daily strategies will you employ in the coming year to minimize those threats?
- How would you rate your self-management during the past year?
- How well and often did you operate in a peak performance mode?
- What improvements will you make in self-management in the coming year
- What are the goals and strategies to improve self-management in the coming year?
- What kind of progress was made in research and development in the past year?
- Detail the progress that you made in researching and implementing new trading strategies.
- What changes in your research and development and new initiatives will you implement in the coming year?
- Detail the new efforts you are planning for the coming year to find and trade fresh sources of opportunity and how you will pursue them on a daily basis.
As Winston Churchill once famously remarked, “If you’re failing to plan, you’re planning to fail.”
In summary, too many traders often neglect the business part of their trading business by too narrowly focusing on price action and getting caught up in chasing trading opportunities.
They miss out on the broader market lessons, perspectives, and more importantly opportunities for improvement.
Don’t let that be you this coming year. Find a way to make this review and planning process a ritual to welcome in your trading New Year!
To your continued trading success!