With the holiday season in full swing and only a few weeks left until the end of the year, it’s time for forex traders to close up shop. But before we can enjoy good times with family and friends, how exactly do you wrap up your trading year so that you’ll be ready to hit the ground running when the holidays are over? Here are three simple steps:
1. Minimize your risk.
Better yet, close all your forex positions. The major currencies aren’t likely to make any significant movements over the holiday break and a couple of pips worth of gains aren’t worth the hassle of having to check price action while you’re buying gifts for your friends or travelling out of town.
Of course, if you’d rather chew your arm off and watch Miley Cyrus twerking on loop than close your long-term trades, then you could at least adjust your stop losses to minimize your risk exposure.
2. Review and reflect on your trading metrics.
Just because you may have ended the year with a profit doesn’t mean it’ll be an automatic win next year. In order to keep on doing what’s working and stop doing what isn’t, you have to review your journal.
With your journal, you can determine whether the forex strategies that you used were correct for the environment, what processes can be improved, and if there were any psychological issues keeping your from the proper execution of your strategy or making the proper adjustments.
If you haven’t started a trading journal, then I suggest that you dig up your broker summary reports and start compiling the basic trading journal stats. Even with this most basic information, you can calculate some helpful but overlooked metrics (e.g., average return-on-risk, longest drawdowns, biggest win/losses, etc.). Check out trade journals made by Pipcrawler, Happy Pip, Huck, and Cyclopip if you wanna see examples and start your own!
3. Make goals for the coming year
Now that you have an idea of your strengths and weaknesses, start listing down your goals and expectations for the year ahead–keep’em simple and realistic, especially if you’re a newb.
Goals like, “I won’t take any impulse trades,” “I’ll identify a trending market before running my trending EA,” or “I’ll only take high reward-to-risk trades” are forex goals that are realistic and measurable.
Don’t focus on the profits–focus on the process because while you can’t control what the market gives you, you can certainly control how you manage what it gives you to keep losses small and maximize profits. With these simple steps, you’ll hit the ground running as soon as the opening bells ring in 2015!