With only a few days left until the end of 2023, it’s time for forex traders to close up shop.
So, how exactly do you wrap up your trading year so that you’ll be ready to hit the ground running when the new year starts? Here are four simple steps:
1. Review your trading journal and metrics
Just because you may have ended the year with profits doesn’t mean you’ll end up with profits again next year. In order to keep on doing what’s working and stop doing what isn’t, you have to review your trading journal.
With your journal, you can determine whether the forex strategies that you used were correct for the environment, what processes can be improved, and if there were any psychological issues keeping your from the proper execution of your strategy or making the proper adjustments.
If you haven’t started a trading journal, then I suggest that you dig up your broker summary reports and start compiling the basic trading journal stats.
Even with this most basic information, you can calculate some helpful but overlooked metrics (ex: average return-on-risk, longest drawdowns, biggest win/losses, etc.)
2. Adjust your risk
Better yet, close all your forex positions.
Major currencies aren’t likely to make any significant movements over the holiday week, so couple of pips worth of gains aren’t worth the hassle of having to check price action during gatherings with family and friends.Of course, if you’d rather chew your arm off than close your long-term trades, then you could at least adjust your stop losses to minimize your risk exposure.
3. Make goals for the coming year
Now that you have an idea of your strengths and weaknesses, start listing down your goals and expectations for the year ahead–keep’em simple and realistic, especially if you’re a newb.
Goals like, “I won’t take any impulse trades,” “I’ll identify a trending market before running my trending EA,” or “I’ll only take high reward-to-risk trades” are forex goals that are realistic and measurable.
Focus on the process before profits because while you can’t control what the market gives you, you can certainly control how you manage what it gives you to keep losses small and maximize profits.
4. Enjoy your break!
Taking a break is still one of the more effective ways to reduce trade-related stress.
Unless you HAVE to trade during the last days of the year, take advantage of the (usually) tight trading environment to take a breather and recharge.
Don’t worry, you’ll have plenty of opportunities to exercise your market know-how and trading discipline in the year ahead!
With these simple steps, you’ll hit the ground running as soon as the opening bells ring in 2024.