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Year End Trading

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2016 is almost over and the Holidays Season is practically here already.

Last week the market got what it was waiting for – Another rate hike and a hawkish Fed.

Now that this rate hike issue is off the table, the markets will probably shift their attention during 2017 to the Trump presidency period and how it will affect the U.S economy.

There are lots of questions and concerns regarding Trump’s economic policies. First of all no one really know what Trump plans are. Second, we do know what Trump thinks about the Fed – Will he act to minimize the power of the Fed? If so, what will it do to Stocks and the Dollar that have been boosted by the Fed all these years?

2017 – Winter is coming…

In my opinion Trump’s presidency will catch most of focus next year but Trump isn’t the only concern that the markets are facing:

  1. Euro Zone – With one Brexit vote and one No vote (from the Italians), will more countries join the resistance against the Euro Zone?
  2. Rates – Central banks are starting to realize that rate cuts aren’t doing the trick no more. Not only that, but with the Fed going against the stream and raising rates, are we heading towards a shift in trend? Rate hikes are coming?
  3. 7 years Bull Run – During the last 7 years the Stock Market nearly tripled itself. Can it last much longer? The 7 years cycle is over. Will the market turn?

It feels like 2017 can be the beginning of a new era. Will we see huge economic changes? Or simply more of the same?

Winter is usually the time that the bears are sleeping… but haven’t they slept enough?

Maybe all they need is a little boost…

Trump winter




 

Holidays season

It is wise to take some time away from the screens around holidays like Christmas and New Year’s. The Markets tend to be quiet and with the big players out (banks, funds etc..), volume and liquidity tend to be extremely low.

Although there’s still one week till Christmas, it is time to get into “Holidays mode” and start reducing trading activities to minimum\none.

Usually I tend to stop trading couple of days before Christmas and slowly resume the trading activity few days after New Year’s Eve.

What can you do during the Holidays season, instead of trading?

The Three Rs

Relaxation

2016 wasn’t an easy trading year. If you struggled and had a rough trading year, taking some time off can be exactly what you need! Use this low liquidity period to clear your mind and relax.

Even if you had an amazing year, taking some time off and enjoying the fruits of your hard labor can do only good for you. Buy yourself something nice… perhaps to your wife. We all work hard to make money – We should know how to enjoy it!

Whether you had a bad trading year or a good one, you need to re-fuel. Spend time with your family and friends, enjoy the holidays and come back energized towards the new trading year.

Reflection

The end of the year is the perfect time to look back at what you did and figure out what was good and what was bad.

If you had a rough trading, look back and try to figure out what went wrong.

  • Try to recognize mistakes that you repeated them over and over again
  • Identify flaws that you may have in your trading system
  • Analyze your behavior and see whether or not you have psychological patterns that you need to address with some protective measures (reducing position size, better risk management etc..)

Learning from mistakes is crucial if you want to become a successful trader but you also need to learn from the good things. It wasn’t all bad!

Even in a bad trading year I’m sure you had multiple winners and good trading decisions.  Reflect on those take the positive things that you need to preserve from those trades\decisions.

Also traders that had a good trading year should spend some time reflecting their performance.

Know what are doing right and preserve it but also identify the few mistakes you may have made and see if there’s a pattern there that you need to address and avoid doing again.

Self reflection trading

Reform

Once you’ve finished with the reflection phase, you need to take the data and make use of it.

  • Adjust your trading system and trading plan
  • Improve your risk management plan
  • Address psychological issues that need to be addressed.
  • Map out knowledge gaps and write a plan on how you close them

The Reform phase is probably the most important phase of them all.

The purpose of the reflection phase isn’t to beat yourself over mistakes you may had. The   purpose of the reflection phase is to learn about your strengths and weaknesses. The purpose of the Reform phase is to make you a better trader.

Your goal as a trader should be to consistently improve. You will do so by taking as much data and insights from your reflection phase in implement them into modifications that will help you improve your trading performance and become a better trader.

Summary

The three Rs should fill your Holidays vacation time. If you want more practical ideas of how you should prepare to the next trading year, read this – 5 things you must do before the next trading year.

The next trading year is going to be as challenging as this one was. In order to be successful and survive the markets you need to evolve. It is never to late to change.

Remember, you can’t go back and make a brand new start… but you can start now and make a brand new ending!

Make 2017 different.. Make it better

Start now!

New start trading


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