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Reviewing End-of-Year Trading Activities: Evaluation and Planning for the Next Year

Conducting an end-of-year review is crucial in your journey to develop as a trader. It's a moment to assess your achievements throughout the year and strategize for the upcoming year. Here's a detailed guide on how to conduct a review of your trading activities and plan improvements for the next year.

  1. Why End-of-Year Review is Important?

    • Measuring Your Trading Performance
      • End-of-year review helps you:
        • Measure Profits and Losses: Evaluate how much profit you've gained and compare it against your losses.
        • Assess Trading Plan Effectiveness: Determine if you've followed your established trading plan and how effective it was.
    • Applying Management Principles
      • In management science, four main functions apply to trading:
        1. Planning: Setting trading goals and strategies.
        2. Organizing: Arranging resources to achieve trading goals.
        3. Actuating: Implementing your trading plan.
        4. Controlling: Monitoring and evaluating trading outcomes.
      • At year-end, you perform the Controlling phase to evaluate results and plan for improvements.
  2. Steps in End-of-Year Trading Review

    • Evaluate Your Trading Performance

      • Evaluation Steps:
        1. Calculate Total Profits and Losses
          • Total Profits: Sum of profits from all trading positions.
          • Total Losses: Sum of losses from all trading positions.
          • Profit-Loss Ratio: [Total Profits] ÷ [Total Losses]
        2. Calculate Average Monthly Performance
          • Average Monthly Profit: [Total Profits This Year] ÷ 12
          • Average Monthly Loss: [Total Losses This Year] ÷ 12
        3. Calculate Percentage of Winning and Losing Positions
          • Percentage of Winning Positions: (Number of Winning Positions ÷ Total Positions) × 100%
          • Percentage of Losing Positions: (Number of Losing Positions ÷ Total Positions) × 100%
        4. Determine Number of Margin Calls
          • Number of Margin Calls: Frequency of margin calls throughout the year.
      • Example Calculation:
        • Category | Value
          • Total Profits | $3,000
          • Total Losses | $1,200
          • Profit-Loss Ratio | 2.5
          • Avg. Monthly Profit | $250
          • Avg. Monthly Loss | $100
          • % Winning Positions | 60%
          • % Losing Positions | 40%
          • Number of Margin Calls | 2
    • Evaluate Adherence to Trading Plan

      • Evaluation Steps:
        1. Review Your Trading Plan:
          • Did you follow the established trading plan?
          • Did you deviate from the trading plan?
          • If yes, what were the reasons?
        2. Evaluate Achievement of Targets:
          • Were your set targets achieved?
          • If not, were the targets too ambitious or too conservative?
      • Example Evaluation:
        • Criteria | Outcome | Evaluation
          • Trading Plan Followed | Yes | Compliant
          • Profit Target Achievement | No | Target too ambitious
          • Deviation from Trading Plan | Yes | Lack of discipline
    • Identify Corrective Actions

      • Steps for Corrective Action:
        1. If there were deviations in implementation:
          • Improve Trading Discipline: Establish stricter rules to follow the trading plan.
        2. If targets were not met:
          • Revise Targets: Adjust profit targets realistically for the upcoming year.
      • Example Corrective Actions:
        • Issue | Corrective Action
          • Lack of Trading Discipline | Establish a more regular trading schedule
          • Targets Too Ambitious | Adjust profit targets based on capacity
  3. Planning Improvements for the Next Year

    • Improvements in Implementation
      • Improvement Steps:
        1. Enhance Trading Discipline
          • Schedule Trading: Establish a consistent trading schedule.
          • Follow Plans: Adhere more strictly to the trading plan.
        2. Improve Trading Skills
          • Training: Attend trading courses or seminars to enhance skills.
    • Adjustments in Planning
      • Adjustment Steps:
        1. Revise Trading Plan
          • Set New Targets: Adjust profit targets and trading plans for the next year.
        2. Enhance Risk Management
          • Adjust Risk Strategy: Modify risk management strategies based on evaluation outcomes.
      • Example Improvement Plan:
        • Plan | Description
          • Profit Targets | Adjust targets to be more realistic
          • Risk Management | Reduce per-trade risk from 2% to 1%
          • Trading Discipline | Establish stricter trading rules
  4. Learning and Rediscovering Passion in Trading

    • Increase Trading Knowledge
      • Knowledge Enhancement Steps:
        1. Study Trading Books: Read the latest books on trading.
        2. Attend Webinars and Courses: Participate in online trading courses or webinars.
    • Rediscover Passion in Trading
      • Passion Rediscovery Steps:
        1. Evaluate Positive and Negative Effects
          • Write down what you enjoy and dislike about trading.
        2. Stay Enthusiastic
          • Set new goals and maintain motivation to learn more.
      • Example Passion Reflection:
        • Enjoyed | Disliked
          • Market Analysis | Emotional pressure
          • Trading Strategies | Losses

The end-of-year review is an opportunity to assess your trading performance, identify strengths and weaknesses, and plan improvements for the next year. By conducting a thorough evaluation, you can create a better plan to achieve future success. Follow these steps to be better prepared for the new year with improved strategies and a more positive attitude toward trading.


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