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:
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!