If you’ve ever written anything of consequence in a non-procrastinatory state, you know the advantage of writing the paper, setting it down, and re-reading it the next day. With a fresh mind brings a new perspective, and its usually apparent upon the fresh read where the initial draft strayed in focus or scope, or where typos and misspellings are rife.
This is the same with the market, in that there is a definite advantage from periodically taking a step out, then a step back in, where you scrutinize your approach and think about how you will improve it over the next year.
In the past two weeks when I wasn’t positing, I did the following:
- Reviewed every trade I made the whole year (Kind of a lot…)
- Categorized them as 1 – 5 based on the “grade.” Made a spreadsheet of this…w/ fancy chart and distribution statistics.
- Looked at before and after charts to see if there were any uniformity to +/- trades. There was. Tried to simulate it in that I cued the chart up to where I bought to see what I saw at the time and if it still fit the ideal entry setup.
- Examined exits. What percent of my exits were near the top of the swing versus way too early, or and exact top-tick?
- Found trades where I broke one of my rules and put them in a separate bin. Many would have resulted in gains, I learned.
- Looked at the big picture. Was I out of the market before declines? I was I long or leveraged long at the beginning of upswings? Yes to all.
- Read 6 books on trading, strategy, risk management and gambling which gave me many ideas on how to augment my approach on these critical subjects.
All in all, it was a great year, thank you for your readership in 2010, and I look forward to trading with everyone in 2011.