Many people rise to their own level of incompetence. Sure, luck can bring a certain amount of accomplishment or status but good fortune only goes so far. Talent and ability are what is really necessary to succeed and for those that don’t have either, the bubble has to burst eventually.
I see this all the time in business and in life. That guy who stepped in gold and landed the client or made the sale with a winning smile. The trader that bet on the right stock and had a good day. That short lived ride always comes to a crashing end when what really leads to long lasting success is SELF AWARENESS. The markets will eventually expose your shortcomings in the form of losses. The client will ultimately need more from you than charisma and charm. This is the main reason that self examination is the most critical attribute needed to excel for the long run.
As the year winds down many people take the time for self reflection.
Its a time when gym memberships escalate and Weight Watchers sees its highest enrollment. The diet officially starts.
In trading, the end of the year is a time for final review of your years performance. Each day, week, month and quarter should be evaluated. Every period should be analyzed regarding your production, your strategy, your implementation as well as the thought process that went into your decision making.
A great trader should have been journaling or have kept some sort of tracking process of the years trades and understand and reflect on the factors that went into those trades.
The most successful traders have a strong insight into their own psyche and understand the decisions they made.
Now that the year is coming to an end, its time to conduct a complete analysis of the year in trading.
I prefer to focus on the negatives first because, as history suggests, there is more to learn from failure than from success.
Take your worst 5 trades of the year and find the common theme in those trades. Then take your 5 best trades and look for commonalities in them. From there you should discern from what worked and what didn’t. The idea is to create insights into your own trading pattern as well as the overall process.
Be brutal with yourself without beating yourself up.
The key to effective and productive analysis is ruthless self examination of the entire process and only then will you experience TRUE growth.