The Traders Journal

Would You Like a Promotion?

LadderThink of the new year as a promotion for you.  The exercise is simple in its execution and somewhat more challenging in its implementation. You’ve been promoted and are moving upstairs to Suite #2013 which has an improved view and is much more spacious for all your investment activities.  What makes this move unique and unlike any other is that the relocation requires you to review your 2012 trading journal and make a careful inventory of all your experiences and investing behaviors from last year. 

To quote Eric Zorn, you should think of it as “a cleansing ritual of self-assessment and repentance that demands personal honesty and ultimately reinforces humility.”  No one enjoys revisiting poor trades and bad executions, but remember that these are the building blocks of your growth as an investor.

Once this is done, you decide which achievements and accomplishments you want to bring with you into the next year.  When you’ve completed this list, you then review it and check off only those deeds and behaviors that you want to move with you into the new Suite #2013.  All the others that you’ve deemed to be unnecessary or unworthy can then be jettisoned from your luggage. 

So into the new year you fly – a new investor!  What remains with you is a compilation of only the “good stuff”, a sort of greatest hits from your 2012 trading year.  This transition clearly involves two objectives:  what you consciously leave behind and what you purposefully take with you.  Your move into this new metaphoric Suite #2013 must be executed with deliberateness and finality.  There is no going back to your old ways.

 


 

Personally, having done this exercise for years, I have found that a major benefit of this approach is that it forces me to address those instances when my analyses were correct but my execution was off (and vice-versa).  Even then, it’s necessary to unbundle my execution and look at both halves  -- the technical execution and the emotional execution.  

It should be crystal clear why your trading journal is such a powerful ally.  Your journal is where you record your past responses, feelings and thoughts – as honestly as your can since these underlie your trading behaviors.  This emotional awareness allows you to dissect the trading process into smaller tasks and helps you track non-productive deviations.  This feedback loop is the secret sauce!

In his book The Successful Investor, William O’Neil wrote:  “I know how bad habits are formed and how hard it is to break them.  But break them you must, so you can develop new habits based on how the market actually works.”  The intention is that you become a modernized version of the investor you know you can become if you would only leave behind those tools and behaviors that will not contribute to this new version of yourself.  You only pack up and retain those elements that you know are the building blocks of this improved investor self.  Think of it as your personal 4R Program.

  1. Reshaping
  2. Realignment
  3. Reprogramming
  4. Refinement

You leave behind your old self – for it was imperfect – and as you let it go, you begin the transformation into the new self.    T. S. Eliot’s verse seems so appropriate: “For last year’s words belong to last year’s language, and next year’s words await another voice.”  As an investor, embrace the challenge and possibilities of the coming 12 months.  Next December, you’ll know the effort was well worth it.

Trade well; trade with discipline!
-- Gatis Roze

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Gatis - I would like you to know how much I appreciate your weekly blog. Although I suspect that you may not get much approbation for writing it, I am sure that there are also many other investors who really appreciate it as well. Many thanks!
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