Happy New Year! 2014 is here and for many, that means some sort of New Year’s resolution—a commitment to try something new or fix something in our lives that is broken.
What do the numbers look like from 2013? Did you come close to keeping up with the broader market? Maybe you beat the market and if so, congratulations but regardless, you can always trade better. We put together a few ideas if you’re looking for something new and better this year.
Popular finance guru Dave Ramsey said in a recent Facebook post, “Resolutions are just flimsy ideas. Goals are better—they are specific, measurable, and have a deadline.” Simply saying that you want to be a better trader this year isn’t going to change anything. Set goals and benchmarks and have a plan to get there.
You can trade something 24 hours per day most days per week. It’s fast-paced and if you step away for even a minute, something could go wrong—at least that’s the conventional wisdom. In reality, the best traders are always bettering themselves by learning something new. When did you last read a book, listen to a podcast, or attend a conference?
Be honest, were there trades where the allure of big profits made you throw all caution to the wind? (And how did the trade end up working out?) Every trader knows that it’s a lot easier to lose money than it is to make it but when you focus on risk/reward instead of how much money you could make, trading works better. Make sure you’re giving ample consideration to what you could lose along with the potential profit.
Hey, we’re traders so this isn’t about buying John Deere and holding it forever but sometimes trades take a while to play out. First, make sure you’re setting a timetable before you put the trade on but as you’re thinking about it, look for trades that can make you money for longer periods of time. It not only saves commission fees, it gives you more time to be right.
Do you have that stable of stocks that you rotate through regularly? When did you last look at new names? Maybe some up-and-comers in the small cap space? Penny stocks may not be the best idea but there are plenty of small and medium cap names with respectable trading volume and coverage that could be the next Twitter or Tesla.
The secret is to never be satisfied with where you are. Regardless of how well you did last year, you can always do better. Make your 2014 goals about getting better at the art of trading and the “making more money” part should naturally follow.
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