2016 was a great year in the financial markets. Wild swings and big trends meant there was a lot of money to be made by simply sitting on your hands and letting your winners run. Time was definitely an ally. But as we reach the end of the year, I would like to take this opportunity to share the lessons that I have learnt (or have reinforced in my knowledge).
Take the sheet with strengths and toss it in the bin. Now you have the key to your trading rules for the year. So, maybe you struggle with accepting that you are wrong. Your rule would be “cut losses quickly with a predetermined stop loss” or “do not add to losing positions”. Maybe you find it hard to deal with losing money. Your rules could be “do not risk more than 5% of your account in any month” or “do not trade your savings account”.
Whatever you come up with, you must take them seriously. THOSE ARE YOUR RULES. See, you have to be honest. Otherwise, you are cheating yourself. Your rules should counteract your weaknesses – not your strengths. Your strengths are working for you already. So if you lie to yourself, you will end up with rules that do nothing for you.
I have compiled a list of lessons that I believe are worth detailing. This list is by no means definitive, but is a good start. 2016 taught me many lessons. Here are 60 of them for you to ponder on. Read them carefully. Print them out and feel free to share this post.
Trading Lessons From 2016
- Not every price turn will make sense according to your trading strategy. That is fine.
- Do not put all your eggs in one basket. One bad step and you’re flat on your face covered in raw eggs. Risk only what you are willing to lose.
- Be careful to follow a strict and well tested route.
- When swing or trend trading, employ a rigid limit on losses but be relaxed on profit taking. Let winners run.
- You will lose money sometimes. No matter how good you are, not everything will work out. That is fine.
- If it isn’t broken, get in on pullbacks! If it is, join the reversal. Be loyal to no market direction.
- If there is no trade, changing timeframes probably isn’t the answer. Stick to your rules!
- Your account balance is irrelevant. It is just money.
- The more you know, the more you know how little you know.
- “White space” is where the money is.
- Trading performance fluctuates just as much as market volatility can.
- Trading requires you to concede defeat. Ego is not your friend. Remain humble in victory and in defeat.
- Assume every opportunity can be a winner. Your thoughts are more powerful than you think.
- Prepare for the reality that every trade is a loser. The market is not your friend.
- You don’t have to trade. Being 100% in cash is a positon.
- No skill worth having is mastered overnight. This will take time. There is no such thing as overnight success.
- The market is a neutral organic representation of price action.
- Price action is determined by an imbalance of orders over time.
- “Hopium” is a loser’s drug. This isn’t Star Wars. Hope will get you killed. Use a rigid stop loss.
- Your perception is your reality. We all see the market, not as it is, but as we are.
- Focus on your WHY and you can overcome any HOW.
- Trading is unequivocally a mental game. Your strategy won’t save you if your mentality is flawed.
- A speculator without discipline will soon become a mere spectator.
- Be patient. Be disciplined. One who possesses patience possesses everything.
- You cannot remove emotion. But you can control it. It is easier to make emotion your ally than to kill it.
- Risk is subjective. Stay in your lane.
- “News” = Entertainment.
- Trust your analysis.
- Life is for living. Don’t spend it staring at charts. There’s more to life than candlesticks. Who you come home to will always be more important than what you take home.
- Always wait for price.
- There is nothing wrong with following a set of rules – as long as they are your rules.
- Your trading style is a reflection of your mental and emotional states.
- Every “thing” works until it doesn’t. There is no holy grail – there are only rules.
- Everybody has a plan until the market punches them in the mouth.
- To thrive, you must first survive. Trade to trade another day.
- Negativity is a distraction.
- Having rules > what the rules are. A bad rule is better than no rule at all.
- It doesn’t matter what your style is – as long as you get to your end goal.
- Buy the dip. Sell the rally. It is that simple. In other words, buy during the sale and sell for the best price.
- Don’t worry yourself too much about the reasons behind individual price movements.
- Look left. Trade right. Price action is the best indicator of price action.
- The market giveth. And the market taketh away.
- Gravity is gravity. Whether you believe it or not. The market will do what it wants whether you believe it should act otherwise or not.
- Take responsibility. No one else is to blame for a loss you incur on a trade you ordered.
- The best trader to follow: YOU.
- Money comes. Money goes. Leave a legacy behind.
- “Overbought” and “oversold” are relative terms.
- Stop losses are price levels where you admit you are wrong.
- Respect every “level” until violated.
- Your trading performance is not happening to you. It is responding to you.
- Buy when everyone else is selling and hold until everyone else is buying.
- Your job as a trader is not to make money but to protect it.
- Stay away from the herd. Crowds create illusion.
- You always have options.
- Do not forget the basics.
- Your life outside trading is reflected in your trading life. If you are an undisciplined slob, you will trade like one. Trading doesn’t build character. It reveals it.
- Your only competition is you. Get on your team!
- Let your goal be to adhere to your rules and strategy. Money will follow.
- Trading is boring. You are either making money, losing money or you are waiting.
- RSI is an injury – not a primary decision making tool.
In 2017, The Traderstation will be running a “giveaway”. We will start small and gradually increase the money value of our prizes. More information will follow in the New Year. The giveaways will be detailed on the official Instagram account (@traderstation) and winners will be picked at random.
If you would like to be kept up to date with information on giveaways and upcoming events in 2017, follow @traderstation on Instagram and turn notifications on.
Follow me on:
I would like to take this opportunity to wish you a wonderful holiday season. May the New Year bring new opportunities.