The new year can be just an arbitrary date on a calendar, or it can be a time to review, refine, and rejuvenate.
It seems as if the holiday season just started, but once again, the new year is upon us. January 1 may be an arbitrary date for making resolutions or setting new goals, but because of the nature of the financial world, it makes sense at the start of a new year to evaluate your investing and make any needed adjustments.
It’s also a great time to get a baseline on your performance in the previous year. If you aren’t already tracking your investment returns, you may wish to take some time to download your trade history and organize it into a spreadsheet. Then determine your performance and compare it to the performance of the overall market, as represented by the S&P 500 Index or another benchmark.
If you outperformed your chosen benchmark, congratulations. If you didn’t, don’t despair; even the best investors have off years. Regardless, there are goals you can set for the coming year that can help your performance.
Standardize your analysis process. The stock market is the ultimate noise maker, constantly throwing information at you from all angles. The more you standardize your stock selection process and filter out the noise, the more focused your analysis may be, and the better your trade and investment candidates could become.
Strive to be more patient and learn to say “no.” Learning to be patient and waiting for stocks to set up properly before entering them, and perhaps more importantly, being able to say “no” to stocks that don’t offer good setups, may help sway the odds.
Commit to cutting losses quickly. A large loss in just one stock can wipe out the gains in several others, which is why identifying and cutting those quickly can be a crucial part of any successful investing strategy. Just remember, before a stock loses 50%, it first has to lose 5%, then 10%, then 25%. The sooner in that progression you cut it, the smaller the impact may be to your portfolio.
Aspire to be more mindful in your trading. It’s easy to fall into bad habits and harmful patterns in the market. Even when you think you have eliminated them, they can slowly creep back into your process if you’re not paying attention. Being mindful can help avoid this trading trap, and it can be as simple as repeating your trading or investing rules out loud before the opening bell, or printing them out and hanging them over your computer so they are always at the front of your mind.
Give yourself a break. Making money in the market isn’t always easy. It takes hard work, discipline, and persistence, but even that doesn’t guarantee you’ll always come out ahead. If you find you’re underperforming in the coming year, don’t get down on yourself. Everyone, from the average investor to the billionaire hedge fund manager, can stumble from time to time. Take that energy you would otherwise expend beating yourself up, and refocus it on identifying what’s not working in your process and fixing it.
These are just a few ideas for goal setting. But no matter what goals you choose to pursue for yourself, just the fact that you’re actively reviewing and refining your trading means you’re starting the New Year off on the right foot.
Do Not Sell or Share My Personal Information
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Investools, Inc. and TD Ameritrade, Inc., are separate but affiliated companies that are not responsible for each other’s services or policies. Investools® does not provide financial advice and is not in the business of transacting trades.
*Investools® 7-day free trial is valid for new Investools clients only. Offer is available through December 31, 2016. New Investools clients are able to select a free 7-day trial for either the Stock Investing course or the Income Investing course. Investools reserves the right to restrict or revoke this offer at any time. This is not an offer or solicitation in any jurisdiction where Investools is not authorized to do business. A valid email address is required to participate.
Please allow 1 week from requesting the free trial to receive an email from Investools® with information on how to access your 7-day free trial. The 7-day trial includes access to either the Stock Investing or Income Investing online course, online and in-person workshops, one-to-one coaching, online coaching, Investor Toolbox®, and Trading Rooms®. After the 7-day trial ends, you must subscribe to maintain access. Cost for the Stock Investing course for non-TD Ameritrade clients will be $699. Cost for the Stock Investing course for TD Ameritrade clients will be $499. Cost for the Income Investing course for non-TD Ameritrade clients will be $2,199. Cost for the Income Investing course for TD Ameritrade clients will be $1,549.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2023 Charles Schwab & Co. Inc. All rights reserved.