Doing a Post Mortem on the Past Year

With the beginning of the year upon us, it is a time to reflect on what worked and get an understanding of how to fix what didn’t work.  Let’s face it, the market moves of 2015 were sharp, jagged and made our heads spin.  While we can look for explanations for why the markets made their moves, that may only just explain a little.  What really needs to happen is to see how we reacted, performed and find solutions to be better in the year ahead.  What do I do?  I do an analysis on my mind, mental exercises that really open my eyes to what happened.  Below is a partial list that would help you start the process.  One caveat to improvement:  be honest with yourself when you do this post mortem. 

  1. What were your best trades of the year?  What made them so good?   Was it the results?  Timing?  Luck?
  2. What were your worst trades of the year?  Did you get unlucky?  Did you sway from your discipline?
  3. How did you wind up the year?  on the plus/minus side?  Is there something you need to change in your process to make the next year even better?
  4. Did you improve on your education?  Are you smarter than you were a year ago?  Certainly with another year of experience under your belt you have seen many different market conditions, 2015 offered something for everyone.
  5. Did you improve your mind?  Read some books?  Attend classes?  webinars?  hire a coach?
  6. Take a look at different points in time during the year and how you responded.  Did you panic?  Were you calm?  Did you take advantage of emotional extremes?
  7. Where is the Fed?  Are they still accommodative?  I look at this every year and adjust if policy changes during the year.  I will make a commitment to the market if they are currently supporting risk assets.

Do you keep a journal?  If so, you can easily find the answers to some of the things that may have caused you to stumble.  I would highly recommend writing your daily thoughts in a trading journal, one of the most powerful tools in my toolkit. This is just a partial list to review, and this can be done on a regular basis – not just once a year.  While we are so immersed in the action of the market day we tend to forget our game plan, how we got to where we are at.  Taking a step back allows us to think rather than do, hit the reset button and get a fresh start.  For some this is everyday, but for others it is a longer time frame.  Once again, be honest with yourself, if not you are only cheating yourself, making the same mistakes and probably going insane.  As Einstein once said, Insanity is doing the same thing over and over expecting different results. 

Bob Lang