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With Christmas just around the corner, I think it’s time to give myself a break. I feel that I’ve been burning myself out recently, and I just need both a physical and mental break. But before I go off, I’m going to take a look back at my trading for the year and see how I’ve progressed.

Let’s first start with the negatives and the stuff that I didn’t do well.

Over the past 9 months, my demo account took a hit of 9.50% this year. While I am disappointed with the results, it is just a demo account and I really did learn a lot this year. It’s more of an ego thing more than anything, but at the very least it wasn’t real money. I think that would hurt a lot more.

My first problem was that I struggled out of gate and I was losing left and right during the first few months. This put me in a hole right away and I always found it to difficult to be trading out of this position. This affected my confidence, and I think this is actually a psychological obstacle that I need to overcome.

What I realized was that I was a very streaky trader. There were some weeks where I would do well, confidence was high, I was hitting decent “singles” each and every day. But there were also some (extended) periods where I would strike out and hit a bunch of foul balls.

The major difference was that I always let my confidence get to my head. When I was winning, I’d say, I’m aiming for 3% this week! But when I was losing, I would let the losing trades get to me, and I wouldn’t take all the best setups that I would normally take. 

Another weakness in my trading this past year (at least early on) was that I would always try to pick tops and bottoms. I would think, “Naw, this can’t continue”, and take a position against current sentiment. The good thing is that I eventually realized that I couldn’t keep doing this otherwise I’d keep taking a beating. I soon learned how to better gauge market sentiment, and did a better job of taking retracements and breakouts favouring the current direction of the market.

One other difficulty I encountered this year was trying to keep my positions open. While I never, ever moved my stop loss, I would many times close my trade ahead of my intended take profit point. I think the major problem here is two fold. First, I’m too impatient and afraid of letting my winners run. I have yet to come to a point where my average winners are way more than my average losers. In the long run, with the way I trade, I really need to have a positive ratio in that deparment.

The second problem, which I’ve somewhat corrected in recent weeks, is that I set outrageous profit targets, especially for breakout trades. I would keep trying to go for homeruns, when I should have kept sticking with singles / doubles. I soon realized I was a lot better taking those 30 to 50 pip wins, rather than holding out for 100+ pip wins.

As you can see, there’s a lot of stuff I still need to work on. But as I’ve pointed out, there are some positives.

As I’ve mentioned, I actually pulled off a lot of winners that were in the 30 to 50 pip range. For the most part, I’m good at spotting good day trade setups and have no problem taking them. I don’t think I have the patience for swing trades anymore, and am better off sticking with the medium sized winners.

This year, I also took a lot more breakout trades. This was one setup that I stayed away from in the past. I was simply too scared to “ride the momentum”. I was always a big S|R fan, and still am. Now however, I’m comfortable enough to take stop-and-reverse positions. I still need work with this type of strategy, but at least it’s a start.

Lastly, and probably most importantly, I kept a somewhat detailed trading journal. For the most part, I religiously input all my trades, including both the setup and the review of the trade. This is what helped me realize that I would go into extended periods of either overconfidence or being too cautious. It also helped me realize that some setup would have been prime to take stop-and-reverse plays.

For 2012, I have a couple of goals that I want to accomplish as a trader.

First, I want to eliminate, or at least decrease the tendency for me to go on streaks. I would really like to be more consistent and churn out profits week in and week out, even if they are small. I don’t want to get into periods where I get stuck in a rut and I end up not trading. It’s not a good feeling at all.

Secondly, I want to keep a more detailed trading journal. While I do a good job of writing down my trade idea and doing the review, I think there are a lot more metrics that I can include. I also think that I should write down my thoughts on the market on the days that I didn’t put on a trade, just so I know why I decided not to trade.

Thirdly, I want to keep experimenting with different systems and frameworks. Even though I’ve been doing this awhile, I always think there’s more to learn. I want to be more familiar with other indicators and not be afraid to step outside my comfort zone.

Overall, I am happy with the progress and realizations that I have come across over the past few months. I do believe that I’ve developed as a trader and truly believe that I can be a good trader later down the road. The truth is that money motivates me and I think trading is one avenue of which I can build my wealth. As long as I keep working hard, I really believe that I will eventually reach that point where I can consistently churn out profits on a weekly, if not daily, basis.

I hope everybody enjoys the holiday break and I wish you a Merry Christmas. See you in 2012!