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“[…] Manage whatever you have left in your account, don’t make mistakes, and be extra picky when it comes to starting new positions. Spend your time away from charts if you are already flat for the year.”

Slawek J —

Traders,

Today I want to talk about the end of the year from a trading perspective.

Those of you who trade for some time now know that around the end of the year we can observe the same behavior patterns happening in markets: losers are being cut from profitable accounts, winners are getting protection in case of January sell-off, etc.

Another cyclical behavior you can spot in markets the second you look at the S&P 500 chart is a drop in volume.

“No one trades in December, man”.

And what does that mean for the retail investors?

Every single thing that happens in a low volume environment: Paying up for entries or exits, sideways movement, runs for stops, you name it. So what do you do in an environment like that? Well, that is easy.

The first thing that comes to mind is to manage whatever you have left in your account, don’t make mistakes, and be extra picky when it comes to starting new positions. Spend your time away from charts if you are already flat for the year.

Think about making adjustments to your trading plan. Set up some goals for next year. In my mind, those are super pleasant things to do by the end of the year.

There were times in my trading career where I was doing opposite things like trying to get back to break even for December or the entire quarter. Overtrading, getting punched in the head from markets for trading in an environment like that, being stopped out by some crazy price action that would happen in a low volume environment. As a result of that, I would ruin a great Holiday season for everyone around me. Ask my wife, she remembers.

So “if you are red” for December or for the last quarter or even for the entire year, do yourself a favor and don’t try to make your money go back in time when the odds are stacked against you. Accept it, write it off, and start fresh in January. Study your losers, try to pinpoint mistakes, rewrite your trading plan.

Enjoy the special time, spend it with your close ones. 

Happy Holidays, see you in 2020.

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