Season greetings Pippers. I hope everyone had a splendid year.
How are our accounts looking out there? Are we in the green or red?
Well, it doesn’t matter what color your account balance is. What matters most is that you are not out of the game. If you did not blow your account, you got to be proud of yourself. If you finished the year above break even, that is a win and deserve to be celebrated. If you finished the year in the red but still have a balance to trade, congratulate and motivate yourself to trade out of that draw down.
Draw down is not the end of the world. You can spend the whole year in draw-down and still bounce back as long as you do not allow emotions to ruin your trading plan.
One of my accounts was in the woods for the entire year, but managed to crawl back to break even. This was such an important achievement because it taught me a few lessons that would be priceless pillars of my psychology.
1. Trust your system
I had a strategy that went well for a few trades. Instead of sticking to it, I switched when a losing streak hit my front door. That sent my account deep in the woods. Funny enough, whenever I went back to my original strategy, my account would start to show positive results.
2. Win rate is not the holy grail
On this particular case, the win rate may be a bit skewed since I had a moment of disobedience to my strategy. However, the account is currently at break even with a win rate that is as low as 39%. The results may have been better if I stuck with my original strategy for the entire year.
3. Patience is key
It is of paramount importance for a trader to be patient. You have to patiently wait for the setups that satisfies your trading plan. As for my case, I only had 145 trades for the entire year. This is because I believe that I do not have to trade daily, and thus I trade off the daily time-frame.
4. Not every month is profitable
Like I said earlier, I spent the entire year in the woods. That means most of the months were red. The few green ones were not even green enough to entirely erase the red ones. It’s all evident on the screen shot below
5. risk management is the holy grail
Imagine what could have happened if I was risking 10% per trade.I could have blown the account before the first world war. My strict and consistent risk management rule helped me stay in the game long enough to learn the important lessons the market wanted to teach me. My absolute draw down was less than 4% with a relative draw-down of less than 6%. I mean how on earth shouldn’t I be proud of myself?
I conclusion, it was a tough year for me, but it wasn’t entirely bad. To me, break-even is a win. I am aiming to improve and put to practice all the lessons I learnt from this account.
Happy New Year Fellow Traders
