Tuesday, January 02, 2007

Trading Resolutions For The New Year

I hope everyone enjoyed the extra long weekend. I haven't fully reviewed my performance for 2006, but it is always a useful exercise. Looking over your trades to highlight both what you did right, and what you did wrong will help you improve your results immensely.

From a big picture standpoint, here are the areas I am highlighting as my Trading Resolutions for 2007:
  1. Let your winners run. Take partial profits if you must.
  2. Don't average down. Adhere to stop-losses; this will not only save you money, but a lot of time wasted on agonizing over losing positions.
  3. Move quickly to take profits/losses when the outlook changes. Don't be complacent and hope for a recovery, or for the stock to come back because it is a "good company".
  4. Pay more attention to big price/volume moves. They often go on to become big winners.
  5. Run more screens. Look for ideas each day; winning stocks are contstantly popping up.
  6. Stick to your buy/sell disciplines. Don't buy or sell a stock because of a tip, comment, article, etc., unless it fits in with your investment strategy.
  7. Don't out-think the market. The collective wisdom of the market is often right more than any one person's opinions.
  8. Don't procrastinate. Be proactive. Time is money, and opportunity costs can hurt performance.


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