So January has been a highly active and high yielding month with regards to profits. It is always nice to hear from you about your successes and I am delighted that so many of you have started the year so well in regards to your trading. However, that’s only 1 month down, another 11 to go, and your long term yearly performance could just be made or broken by doing this one very important thing. Continue reading to find out what this is…[subscribelocker]
Now without wanting to bring down the natural excitement, enthusiasm, hopes and dreams that come as a by product of a purple patch in the markets, I do however want to blog about the importance of keeping ourselves in check to ensure we don’t undo the hard work that has got us to where we are at the end of January.
When things are going our way, trades are running strongly, profits are accruing, it can be easy to be lulled into a false sense of security and trust me when I say I talk from experience here. The worst thing, and the frustratingly common thing to happen after a purple patch is more of a red patch as the losses begin to accrue, almost out of nowhere. It is the markets way of keeping us in check and really isn’t a bad thing to happen (it taught me well) but if we can avoid it then all the better. What generally is the cause of this downturn in performance is a slightly more relaxed approach to the markets. Confidence turns into over confidence, border almost bordering arrogance, and we start taking less than desirable trades. If this arises, we swiftly have to nip it in the bud. We have worked so hard to make money, we now need to work equally hard at preserving it and slowly but surely adding to it throughout the year.
So one thing I do without fail (and it is something I highly recommend doing) is to spend some time on the very first weekend of a new month (now that we have come to the end of the month) to do some reflection of my previous months trading. Go back through your winning trades, go back through your losing trades. Look for the common traits that created your purple patch, and see if there is anything you can learn from your losing trades to avoid making the same mistake in the future. Arm yourself with this powerful information, just the process of doing it will ingrain onto your subconscious memory, but if you feel writing it down helps, do this too.
In an ideal scenario, as well as your self reflection, you will also have a mentor or peer who can provide some objective feedback too. Sometimes we are blind to the real reasons for our success or failures and someone from outside can help us to identify these factors better than we could do ourselves. This is especially ture if you are new to trading and experience is limited. I am indebted to my mentor who helped with my reflection in the early days, to the point where I am now able to confidently and constructively do it myself these days. It’s the main reason why I continue to mentor others today. The process has an incredibly positive knock on effect on our future performance. We look back in time to help us to go forward with greater confidence and conviction.
You will find that this process of reflection is conducted by all top performers and the main reason I do it today. If people at the very top of their game do it, we must too. Businessmen and women will review good and bad months in their business, top football teams will replay matches to identify strengths and weaknesses, all with the cause to ensure they continually improve and never become complacent.
So as well as taking time to reward yourself (which you certainly must do!), also put aside some time to reflect on why you did so well in January and put yourself in the very strongest position to be able to continue the excellent form into February.
Have a great weekend