Author: Chris Hood
Be sure to check out new episodes of my video podcast each week, where my ace pupil Brian Jones and I talk the ins and outs of options trading- and give you insights and strategy that you can immediately put to work for you in the markets.
The older I get, the faster time seems to tick by.
It’s hard to believe it will be 2022 in just a couple of days. And since I won’t be chatting with you until next year, I’d like to wish everyone an excellent (and safe) weekend.
This is the time to reflect on how successful you were as a trader and how you will improve over the next twelve months.
Ask yourself the hard questions.
Did you have a profitable year overall?
What problems are you struggling with, and how do you intend to fix them?
What is your game plan for 2022?
If you aren’t brutally honest with yourself and don’t put in the necessary work to get better, you’ll just be stuck in a rut.
Those of you who ended the year in the red need to figure out precisely what mistakes cost you money. Remember, almost all professional traders lost money until they made the necessary changes for consistent profits.
Like anything else, trading well takes practice.
Mistakes are part of the process; you only truly fail if you give up.
What I’d like to leave you with this year are three quotes from some of the greatest traders of all time, along with a bit of commentary on how they influenced me.
If even one of these hits home and boosts your performance, it will be the best gift I could ever receive.
I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have – Paul Tudor Jones
The most crucial idea in trading is to preserve your capital. When it runs out, you’re done. Jones knows this lesson from experience and it’s why he’s a multi-billionaire.
Trading isn’t a video game – there is no reset button.
If you’re like most retail traders who don’t start out wealthy, you can’t simply dump more money into your account when it goes to zero. So make risk management priority number one.
It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. – George Soros
Soros is an extremely wealthy man and a brilliant trader.
This quote summarizes why those who focus only on win rates are misguided.
It’s possible to go broke with a 90% win rate and get rich while winning only 30% of the time.
Rather than how often you win, focus on how much you win compared to how much you lose. Strive to get your profit-loss ratio as high as possible.
Have a system in place to cut your losers early and maximize profits on your winners.
To make money in the markets, you have to think independently and be humble. – Ray Dalio
As concise as this statement may be, it gets to the heart of why Dalio is among the world’s wealthiest men.
He has a system that works, and he’s confident enough to trust it over the opinions of others. I’m certain that Dalio doesn’t spend his time worrying about meme stocks on Reddit.
And perhaps most importantly, the market has taught him humility.
Traders who operate on hubris wipe out quickly.
As you celebrate the New Year, keep this wisdom in the front of your mind. Then, learn from your mistakes and strive to make 2022 your most profitable one yet.
P.S. I’d like to personally invite you to become a member of our AlphaHunters trade group. If it’s trading success you’re after, let me help you make that dream a reality. Just this week, our subscribers took another win of 62% on MSFT. Click here to find out more.