Started the New Year with the best of resolutions? We all know how difficult it is to stick to these New Year's trading resolutions, but you can do this. This post will cover a few tips on sticking to your new year's resolutions past January - and beyond!
How to Stick to Your New Year's Trading Resolutions
1. Put the most important resolutions first
Let's face it. You test the waters with resolutions like "I'm going to be more patient." or "I'm going to manage my risk more effectively." But if you get hit by a curveball, it's easy to slip into your old ways. If you want the resolutions to stick, get rid of the ones that aren't working or aren't that important to you. Place the most critical resolution first on your calendar, and your brain will subconsciously re-prioritize it.
Additionally, placing the most critical resolutions first helps you to focus on just one goal at a time when it's most essential to succeed. For example, if you want to trade every day in 2021, write that down first. With each new month, add another resolution like trading with 20 contracts or using more money - or whatever other goals come to mind. Finally, take a moment each morning or evening to plan your day (or week) based on these resolutions' order.
Revisiting your resolutions? Take a look at our New Year's Resolutions for traders in 2021>>
2. Don't rely on willpower
Longer-term, disciplined traders rely on developing a trading plan. The best thing is to select a strategy that you can stick with for the long-run and fit it into your life. Choosing a system that exploits psychological biases in the market rather than relying solely on your willpower is the key to trading success.
While trading psychology is the most critical aspect of your game, you need a working strategy to put your psychology into action. Using that strategy is crucial for your success. Without it, you will never have a plan to follow.
Focusing on your trading psychology game? Read the ultimate trading mindset checklist>>
3. Keep it simple
A trading resolution is a goal we set for ourselves to improve or refine something about our trading. In today's world of information overload, it's difficult, if not impossible, to keep track of all these goals, so find out what works best for you.
Trading resolutions don't have to be overwhelming. Decide on your goal, design your strategy, execute the plan, review and adjust along the way. Keep things a bit more simple and don't try to be perfect, that's the best way to accomplish your goals. It's easy to become overwhelmed with what you want to achieve in one day, so take it day-by-day. It sounds clichéd, but it never hurts to hear someone else say stick to the basics.
Feeling overwhelmed? Here's a guide on how to manage anxiety, stay focused and get used to working from home - with meditation apps, tips and more>>
4. Set specific goals
Set specific goals for the New Year. Make sure that they are SMART (specific, measurable, attainable, relevant, and time-bound) and use only positive language: aim to be a "successful investor" rather than "don't lose money." Keep financial goals realistic and manageable by setting time-bound targets. Then use goal-setting techniques to achieve them. This will ensure that you get started on the track.
One of the first steps to keeping your New Year resolves to write them down – make a list and print it out, or get a journal and write them in. Secondly, you have to set a deadline for each goal. After you have set your goals, look over them, then assign yourself deadlines - don't make them too far away, but don't make them too close either so you don't back down from hard work. You have to commit yourself, and that means being sure that you're going to follow through.
A lot of your goals will depend on your personality. See which trading strategy suits you here: Which Trader Personality Are You?
5. Work on your motivation
The old saying, "easier said than done," is so true. With that in mind, your first step to sticking to your trading resolutions is making sure you're genuinely motivated enough to follow through. To do this, find a way to encourage yourself beyond the passage of time by making your motivations about having more money for the future.
Once you're motivated, you'll realise it's easier to say "I'm going to do this" than actually doing it. That's where the real challenge lies. Programming trading rules isn't something that can be mastered overnight, and neither is following the rules just because you said you would. Try to see your new trading resolutions as a long-term practice, one that will ultimately result in more profits and a better understanding of the financial markets.
Get inspired. See 4 psychological traits shared by all successful traders>>
6. Don't be punished by perfectionism
Trading resolutions that are too stringent, unrealistic, or simply not realistically attainable have the same probability of failure as the rest: 100%. Please make your trading resolutions realistic and achievable, but also push yourself out of your comfort zone.
There is a way to overcome myopia and a way to use it to your advantage. Through the principles of loss aversion and the endowment effect, you can get your subconscious mind working for you and avoid being punished by the fear of flawlessly executing a trading plan.
Much like the resolutions we make in the New Year, trading is a practice in constant evolution. Trading is something you need to evolve with and adapt, little by little, day by day, as you go along. The market has its ups and downs; we are not going to have winning weeks or months. What's most important is how you adapt to changing circumstances and learn from your mistakes, which can take time for many of us struggling with perfectionism.
"Take your financial future into your own hands." - read our Q&A with trading expert and psychology coach Mandi Rafsendjani here>>
7. Create a support group
If you don't want to talk about your trading, why not share your experience with other traders? Check out what others in the support group think is essential and why. Ask questions on what they're learning from trading groups that could be useful to you. Make sure you ask for help if you need it. Listen to the views of other traders and learn from their experiences. You might find your problem is more common among traders than you imagined.
These resolutions are about creating a new way of thinking, new habits, and routines and breaking old thought and behaviour patterns that no longer serve you. To do that, you will need support. For instance, set up a weekly online support group with your stops and targets entered the same day into the same platform. Make it realistic to ensure that when you all post your results, you will be in the chance mode and others in trend mode. This helps keep the accountability amped up.
Want to see how other traders set up their space? Take a peek inside some forex traders' home offices here>>
8. Write down your progress every day
By keeping track of your progress every day, you will evaluate your trading habits and identify things that need improvement. For example, if you're finding that you're falsely confident after a few wins in a row, note that on your trading journal and make a mental note to trade with more discipline under similar circumstances in the future.
If you're continually making the same poor decision when price breaks out of an obvious pattern, note that as well so you can take steps to overcome your shortcomings. By looking at the big picture, it is possible to learn valuable lessons from past experiences without beating yourself up over what might have gone wrong.
Here's the ultimate trading plan checklist>>
9. One change at a time
Take baby steps to your new trading resolutions. Focus on one change at a time, like taking five minutes before your trading day begins to visualise the type of trader you want to be, or reading a chapter from a trading psychology book. With a little time and patience, abstract concepts like discipline and flexibility become ingrained into your daily routine. It won't happen overnight, but by revisiting each resolution every week or month, they will stick with you for good.
New Year's resolutions are always significant. Make this year different. Small wins add up over time. Create a trading account that works for you and commit to the changes you can control. Resolve to work every day to improve your strategy and narrow your losses. Commit to spending just a few minutes reviewing your trading each day. Change only one thing at a time.
For more tips on finding the time to commit to trading, read our blog on 5 Tips for Fitting Trading Around Your Day Job.
10. Reward yourself for small achievements
Our new year's trading resolutions frequently fail because they are not tied into a rewarding system. Emotions play a significant role when making financial decisions, so why not turn to the idea that success and achievement can be rewarded with the things that make us happy?
Short term positive reinforcement can keep you on track for long-term success. A study by Harvard Business School found that clients who received a small coffee voucher when they opened an IRA saved 9% more than those who did not receive the gift.
We recommend setting monthly trading goals and rewarding yourself with a small gift when you meet them. New Year's resolutions have considerably less staying power than your retirement savings. Stick to your resolution this year with a consistent, enjoyable, and achievable trading routine.