Trading Resolutions for 2020

The new year is always a good time to reflect and look back on the year that was and make your Trading Resolutions for 2020.

Everyone likes to start the new year with a clean slate. Yet before making those new year Trading Resolutions for 2020, critiquing key aspects of your trading strategy and behaviours from the previous year is important.

To keep it simple, breaking your review down into two basic components is going to provide you with the key data you need:

1. Trading Statistics and Financials
2. Behaviour and Psychological Statistics

Both these areas can be made as simple or complex as you like. Yet for me simple is always best, and tends to ensure that reviews actually happen. And if you have been using The Chartist’s Share Trade Tracker all year, then the review process is even easier.

Let’s look at the first component ‘Trading Statistics & Financials’.

Here’s the basic mathematical statistics you should collect:

1. How many trades did you take in 2019
2. How many trades were winners / how many trades were losers / what was your win %
3. What was your average win P&L / your average loss P&L / your win loss ratio
4. What were your gross profits / your gross losses / your profit factor

Each of the above statistics will paint a picture in the relation to the numbers side of your performance.

Did you trade too much or too little in 2019 based on market conditions?

Was your win percentage too low based on your win/loss ratio (average win P&L divided by average loss P&L). Did this then affect your profit factor (Gross profits divided by Gross losses)?

If your profit factor is greater than two then you are doing well. Greater than three then you’ve had a pretty decent year. Below zero though means some changes may need to be made.

Win percentage, Win/Loss ratio, Profit factor are all important statistics you need to keep track of. As well as understanding their relationship with each other to be able to make improvements to your trading in 2020.

So understanding the maths is important when doing your reviews. Get the numbers right and you are halfway there.

This has hopefully helped you in critiquing key aspects of your trading strategy and behaviours from the previous year. 

Welcome to the New Year and best of luck with your Trading Resolutions for 2020.

We will look at the ‘Behavioural and Psychological Statistics’ in Part 2 next week.

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