With the start of a new year, we always hear about resolutions, or the attempt to arrest bad habits. It's usually easier said than done -- and we often find that, by the end of January, our motivation has disappeared and we fall back into the same old patterns. The challenge is to make a goal of improvement and stick to it. There are a million excuses for falling off course, but the truly dedicated stick to it and become better for it.
But, really, the onset of the new year is more awareness than anything. Realistically, you can change your habits any day or time of the year, and not just the beginning. I understand the excitement and potential momentum from a renewal or rebirth, but those serious about their craft are always looking for ways to improve.
Still, given that we're about to embark on 2013, below I offer a short list that may give you an edge in the market. Think about what you need to improve personally off this small sampling, and work on it!
1. Feedback mechanisms: One of the best things you can do is to keep a trading diary. Record all of your trades, thoughts, emotions and events during your trading day. Be consistent and honest. Pick it up through the year and see where you can make some adjustments.
2. Flexibility: Recognize that you can shift gears midstream if things aren't working out exactly as you'd planned. We often find ourselves with shoes stuck in cement. You always have options and can do many different things -- not just sit on the sidelines!
3. Turn down the noise: The most distracting thing out there is some pundit/expert telling you their opinion as if it's the gospel. In our attempt to get all the information available, we hear this all the time. Well, as former Chicago Bears head coach Mike Ditka would say, "Stop it!" Pay more attention to your own research -- charts, technicals, fundamentals -- whatever your poison is. Focus less on what the other guys are saying. Remember, nobody cares more about your bottom line than you.
4. Get Smarter: I make it a point to read at least three new books a year, mostly about markets and economies, or biographies or self-help. You can never go wrong improving your brain. Attend more webinars on trading, as well. I myself will be learning more option strategies to become a better options trader in 2013.
5. Be a Contrarian: Of course, there is safety joining the herd. Even if that herd turns out to be wrong, many more will join you in the pain of loss -- and no one wants to be the one who loses when everyone else is winning. Nonetheless, when sentiment is tilted too far to one side, the boat gets heavy. We know what happens then, right? There's nothing wrong with looking in the other direction when everyone is on board. The best money is made this way.
I hope this is a good list for you to get started here. Add a few more to this list and track your progress over the year. I guarantee you will be a much better investor a year from now.
Happy New Year!