The countdown to 2021 offers a chance for traders to set goals for the new year.
Who else wishes 2020 could just last forever?
Okay, we’re joking. As much as we’ve grown from the lessons learned in 2020, most of us are ready to start the new year with a clean slate.
At a time when many of us are wishing for a prosperous new year, this could be a moment for traders to reflect on their intentions for 2021. You may not be able to control how the markets will perform, but you can control how you react to them. These resolutions may help traders take a strategic, balanced approach to their goals.
WAKE UP EARLY
Most of us spent the majority of our time at home in 2020, and for now, the homebody lifestyle looks like it’s here to stay. But just because you may be spending all of your work and leisure time in the same place doesn’t mean you can’t add some structure to your schedule.
Instead of rolling out of bed immediately before trading opens, resolve to wake up early enough to have a healthy breakfast, research the markets, and read the news so you feel prepared for the day.
Whether you trade intraday or have longer investment goals, creating a trading plan can help you determine your strategy and discourage you from making spontaneous, ill-informed decisions. Be sure to identify your objectives, entry rules, and watch lists to prepare for each day of trading. And if you feel yourself regularly straying from your strategy, it may be time to reassess your trading plan.
FOCUS ON YOUR TRADING JOURNAL
You might have a template for a trading journal, but many traders fall behind when tracking the entry and exit positions, market conditions, or prices of their trades. One way to refocus in the new year is to evaluate how much attention you are giving to your trading journal. Studying the patterns in your habits may help you coordinate your trading plan.
ADAPT TO SURPRISES
The markets can always be unpredictable, but 2020 demanded us to expect the unexpected. In the same year that dramatic market sell-offs in March triggered several circuit breakers, the market indexes broke records by the fall. If that wasn’t astonishing enough, some experts in the energy industry were baffled by oil prices plummeting below zero when oil producers were willing to pay to get rid of their supply in April.
Identifying patterns in market behavior can be helpful, but resilient traders should be willing to create a Plan B. The stock market can surprise even the most seasoned investors, so being flexible in the face of unforeseen circumstances may help during turbulent trading days.
KEEP EMOTIONS AT BAY
Although the adrenaline of the stock market can be thrilling, letting your emotions guide your decisions can be dangerous. Allowing anxiety, exhilaration, or frustration to overshadow your logic is usually distracting at best and devastating at worst.
Traders who try to make up for a loss by immediately entering an unplanned larger trade out of frustration — otherwise known as revenge trading — risk doubling their losses if they lose again. Instead, resolve to stay disciplined by documenting the reasons for the loss in your trading journal.
If 2020 has taught us anything, it’s to be patient with ourselves when the going gets tough. You may not be performing as well as you usually do because you are overwhelmed, stressed, or suffering from burnout. Instead of pressuring yourself to keep up, you may need to step back to take care of yourself.
Nobody who trades consistently can win every time, so there’s no need to punish yourself for every loss. And whether you need to allow yourself more short breaks during the day or step away from trading altogether, giving yourself permission to regroup when you need it may be vital for your mental health.
Whatever your goals are for 2021, the new year is an opportunity for you to revitalize your investment performance. The markets can be an exciting challenge; that's why Score Priority has the tools to help you know the score. Please feel free to visit our website to learn more.
You should consult your own tax, legal and accounting advisors before engaging in any transactions. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.
Nothing in this communication shall constitute a solicitation or recommendation to buy or sell a particular security. Accordingly, no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein.