7 Things I’m Doing To Trade Better In 2013

It’s that time of year again.  I always take the last few days of the year to debrief and reflect on my trading business, using what I’ve learned to gear up for next year’s market action.

This list is the groundwork for my trading plan, which I rework each and every year.  I would love to say that I stuck to my plan without fail in 2012, but that wasn’t the case.  I deviated too much, and this is the first step in getting back on track in 2013.

Here are 7 things I’m doing to trade better in 2013:

Taking action on my feedback loop

My feedback loop is the most important part of my trading.  What I see going on in the market before and during the trade   There were plenty of times in 2012 when I recognized what was happening, but yet I didn’t act on it.  I let my stop loss get hit for the full weight (or as you will see below, even stretched it a bit), rather than moving them up to mitigate losses or book gains. It’s imperative that moving forward, I believe in what I see and adjust accordingly. While this won’t always work out in my favor, the benefit of the discipline it will fortify will be the best thing for my business.

Always having a legitimate price target

I fell into the trap of looking for targets based only on my risk, or on what I thought an average move would be. While there is nothing wrong with having these as background levels, my exits will always be based on something with substance, such as a Value Area high or low, Point of Control, moving average, Fibonacci level or other key support or resistance level. Even then, I will look for a reason such as divergence to accompany those levels. While this is normally how I set profit objectives, I saw myself straying from this too much in 2012, and that is not acceptable for the level that I want my business to be at.  Say it with me-“The S&P Futures usually moves 4 points is not a valid profit target.”

Becoming more fluid in my scalping

One of the seemingly never-ending battles I have with my trading plans is whether to hold on for bigger moves, or take more rapid fire scalps, which reduces exposure but captures smaller crumbs of the bigger loaf of bread.  This past year I started blending both, holding a small core position around scalps, which allowed me to pay for drawdowns while staying with the natural flow of the market.  I was certainly not as regimented as I would have like to be, and my transitions from one to the other will be more fluid in 2013.

Taking my setups

I absolutely tortured myself in 2012 by not taking trade setups that I’ve taken time and time again. I’d love to say there was a legitimate excuse such as “I was getting killed and lost faith” or even “I was up enough (ha!) on the day, and didn’t want to risk it”, but most of the times, I just stared like a deer in the headlights, and  couldn’t figure out why I didn’t take the trade. Did every trade I pass on turn out to be a winner?  Of course not, but the more legitimate setups you pass on, the more likely you are to take an impulsive trade out of catch up mode, and that’s something I am avoiding in 2013.

Standing pat with my stop losses

I was guilty of moving my stops a bit this year.  While some moves wound up hurting me, most of the time they were just little stingers, like a band aid coming off too slowly.  The challenge with this is that these little stingers add up quickly, and by the time you give yourself another tick or four multiple times, you are putting points onto your losses. I’m setting my stops and leaving them be as a worst case scenario, but as I said above, my feedback loop will override the full risk if need be.

Always coming in with a structure model

There were times in 2012 when I decided not to prep for the next day’s trading because there was too much haziness in the market structure.  Instead, I decided to just brush aside my prep work (probably to play SongPop on Facebook) in favor for seeing how things “shake out” the next day.  There’s no reason for this.  If the daily chart is murky, dial down to the 60 minute.  If the 60 minute is still murky, go down to the 15 minute, and so on.  Even if I have to work on the micro-structure, I will still be able to map out a plan for the session.

Meditating every day

I’ve written about this before, and I am still a strong proponent of meditation.  I don’t believe that you can attract profits into your account by counting your breaths, but I do believe that meditation, even in a simple form reduces your impulsive actions, and calms the monkey in your brain that wants to mess up your best laid plans.  I’ll have to borrow the time, but I will make sure that my morning starts with some quality “me” time.

What are you are going to do to trade better in 2013?  Let me know by leaving a comment below.

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5 Comments

  1. Oropendola says:

    I’m not going to beat myself up, or call myself stupid or yell at myself for missing a trade. Sometimes they go by. There is always another trade waiting in the wings. I am allowed to make a mistake. I will be patient and wait for another trade.
    -o

  2. Oropendola says:

    ^5

    Happy New Year!
    -o

  3. Bob Gravely says:

    This is an excellent analysis and something I will definitely be doing. I do an EOD evaluation to learn daily, but that’s pretty micro. I am working harder to:
    1. Take the set-ups that come along. I track them well and know what I can expect within reason. But you never know when the setup will lead to a 10point trade.
    2. Keep my stops in place while the position has some time to breath. I have a tendency of wanting to reduce risk too soon and moving my stop up and choking the trade off. I am working on a set of rules to control that better.
    3. Continue to work on emotional control. Don’t get cocky when I have a big trade or string of winners. Or don’t get depressed if/when I have that string of losses. I know that I have a 65%/35% win/loss ratio long term so I have to use that to calm the emotions.
    4. Don’t overtrade. My system/rules on average puts me in 3 trades a day which works well for me. But some chop can cause me to chase and trade up to 5 times which is about the max. I need to make sure I know where I am in trades per day which I do track daily.

    Those are the main ones I’m working on today and for the rest of the year. So far, so good.

    • Tiny says:

      Bob-

      Those are excellent points and it sounds like you have a great handle on your trading business.

      3. is in my opinion the most important! Your words are dead on. Emotional CONTROL not emotional ELIMINATION like some preach. You can never eliminate emotion, trading is about money and there is nothing more emotional than that!

      I also love how you pointed out the 65-35%. You aren’t trying to be 95% or some other imaginary number. You are in full understanding of your process, which is important.

      tiny

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