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Note: The DEMO trading account will be reset in 2012, so my trades towards the end were very big positions. Just wanted to see if I could make it back to breakeven with cowboy type trades. DO NOT TRADE LIKE THIS. My maximum risk is % per trade, rarely do I go more than that. In this blog post, I’ll only took note of the wins/loss, amount of trades. Without my cowboy trades during Dec 19-22, my actual drawdown is 9.98%.

As you can see, my performance this year was terrible and I didn’t trade to my fullest potential. And I this is mostly because of the difficulty of picking myself up after losing momentum. When I am winning, it feels good to trade. I am very motivated and I trade often.

Now, once I experience a crushing loss, I tend to regress and just overall lose energy to trade. I am demotivated, and I hesitate on every trade. There were even times that I just didn’t look at the charts because I didn’t want to lose.

I realize that this has been a problem of mine since I began trading. I have trouble accepting loses because of my competitive nature. In sports or games, if you really are good, there is a chance that you’ll go undefeated or go on sick winning streaks. In trading, on the other hand, no matter how good you are, you WILL LOSE and experience drawdowns. This is something I have difficulty in dealing with.

The funny thing is that in a live account that I share with someone else, the performance was actually okay. The ending balance of that account was above breakeven. Knowing that someone else was depending on me kept my emotions and psyche in check.

When I’m motivated, I believe I can analyze the market (technical, fundamentals, sentiment) pretty well. I follow the trading framework strictly, and barely, if at all, deviate from it. One major issue that I have in chart analysis is that I tend to overlook the longer time frames. This results in using range-type trades on a trending market and using trend strategies on a sideways market.

Speaking of trading frameworks, I noticed that I’m more of a systematic trader. Similar to when I play games, I want to follow a certain build order. When I see something, I’d like to know how to react in advance. I don’t like making things on the spot as it messes up the possible “end results.”

For 2012, I’ve got a couple of resolutions:

1. Since I prefer systematic trading, I should be make my entry and exit rules more specific. This makes sure that my reaction is consistent throughout the year and that the law of averages will work for me.
2. Look at the longer time frame and spend more time determining whether the market is trending or ranging.
3. Focus on intraday trading and no more swing trades on my demo account. For 2011, I said I’d only focus on day trading, but I kept sneaking in swing trades whenever I found a good setup. This confused me and led to me using long-term trading strategies and biases on 15M charts.
4. Explore new methods of trading. I feel that the trading framework that I use is heavily ingrained in me that I have a hard time recognizing the strengths of other methods of trading. For this year, I should force myself and look at other options.

Since the year is coming to a close, I think I need to answer that “elephant in the room” question – Do I still want to be a trader?

I’ll be honest here. I don’t want to be a trader because trading is fun (even though it really is fun), I want to be a trader because I want to be extremely rich. For now, given my skillset, I think trading will get me there. What this means is that while I do want to be a trade NOW, I can’t say the same 5 years from now. Perhaps something else might come along that gets me there quicker and fits my personality better. Who knows!

Alright folks! That’s it for my year-end review. I’ll see ya’ll next year.