skip to main content
Trading Education Posted by Team Topstep July 8, 2021

The Trader’s Mid-Year Pulse Check

Ski Ball

Self-Awareness, Reflection, and Trading Success

By: FairValueTrader

Last week the calendar transitioned from June into July. Not only does this mean that we are in a new month and a new quarter, but this also marks the halfway point of 2021. My readers know that I often refer to self-awareness and reflection as two psychological disciplines imperative to trading success. Successful traders will have the ability to analyze themselves after each trading day, week, and month to determine their overall performance. 

The mid-year point is an excellent time for self-inventory from a larger perspective. At the first of July, I like to cement my plans and goals for the remainder of the year. For us, our self-analysis is limited to the trading performance and psychological and disciplinarian assessments through the first part of the year.

In today’s article, I will lead you through the self-reflective process.

How Is Your Trading Performance?

The first and most obvious question is regarding trading performance. If you have been struggling all year at this point, there is still time to turn your year around. Even if you can’t wholly transform 2021, you can work to close out the year strong and give you momentum going into 2022. 

There will be some ideas in the following sections that may assist you in reaching your potential in 2021. The first idea I will mention is to ensure you have healthy goals for your trading performance. Many traders start by hoping to get rich and soon learn the ugly side of trading. A more realistic goal before getting rich should be earning a solid living from trading productivity. 

However, even before you immediately target earning a good living, you might be better served to set a goal of consistency, even in modest terms. This will enable you to work on so many other features in the life of a trader, preparing you with life skills. 

No matter who you are, you should set performance expectations that are obtainable and challenge yourself to produce your best. In other words, while you strive to better your productivity, you should still aim at what is reasonable. Unfortunately, I can’t tell you how many times I’ve seen traders perform poorly, primarily because they set unhealthy expectations for themselves. This topic brings me to my next item to consider in your midyear plan. 

Does Your Trading Plan Need Some Polishing Up?

How about your trading plan? Yes, rather than focusing on performance in terms of profit and loss, considering your overall plan. There are times when the difference in a loss and gain is just the nuances of a trader’s plan. Other times, the plan is the difference maker between having modest and significant profits. 

Consider, for example, a trader I knew who had reasonable enough potential yet remained stuck in the middle somewhere, unable to go from modest profit to solid success. She was very consistent but was missing something. At her request, we began to examine her plan. It turns out she utilized a responsible 2:1 return on risk profile. However, as we began to explore this, we found that she left too much on the table and might be better served by targeting a 3:1 return on risk. The backtesting indicated this, and the results were fruitful as she took her profit to another level. 

On The Flip Side

I was consulting with a man who was trapped at break-even over the course of two years. When I analyzed his trades, I could see that he had good entries and an exemplary system. However, his stop loss was too tight. There are few and far between examples that I can give when I encouraged a trader to widen their stops, but this is one such occasion. 

The result was, when he gave his trades enough breathing room to work, with a wider but still responsible stop loss, it took him from being a break-even trader to consistently bringing in modest but decent profits. 

There are so many elements to a trading plan that I couldn’t possibly name them all. For some of you, it may be necessary to reflect on the times of day you trade. For others, it may be the nuances of the system you follow. Either way, a good trading plan will only work if you have the discipline to follow it. This brings me to my next reflective question. 

Is Discipline An Issue?

How’s your discipline treating you? One of the most challenging aspects of trading is the mastery of discipline. I’ve known traders who could chart better than anyone and who could pick the best entries. However, the lack of discipline was the difference-maker in success and failure. 

Discipline and patience tend to go hand in glove. Some traders have sound systems, but they want to chase trades that don’t meet their strict criteria. The result is the same as a gambler’s odds of winning over the long haul. Other discipline issues may include irresponsibly and impulsively adding to losing trades or too quickly exiting winners. Again, recipes for disaster. 

Your trading discipline should come under your microscope throughout your trading day. However, as you analyze yourself over the first half of the year, it remains an excellent question to give attention to. Is your approach to discipline helping or hindering you in reaching your goals? 

Physical And Mental Health Matter

When it comes to what’s helping or hindering your goals, it is good to examine your overall well-being in this mid-year trading reflection. Well-being incorporates many avenues of life, whether it be more physical elements like how well you are sleeping at night or psychological dynamics of what is keeping you awake at night. 

As you assess yourself at this point of the year, there have been various factors in your life apart from trading that has affected you, and some of them were surprises. For example, it may be the health of you or a loved one, it could be relationship dynamics have changed for the better or worse, it may be that you have relocated, or perhaps even have encountered problems on your regular job if you are not trading full time. 

Regardless of which kinds of physical, mental, and emotional potentials you have met in the first half of the year, they likely presented some challenge to your trading in at least minor ways. Therefore, if you have struggled with your trading, it may be worthwhile to take an inventory of these types of struggles and evaluate to what degree(s) these situations could have affected you.

What’s most important is to be aware of yourself, your thoughts, and your emotions. If we own these, rather than hiding from them, we can do a better job of processing them and healthily maneuvering them. Physical and emotional health is essential in all areas of life and directly correlates to trading. So remember to do self-care, chart your own well-being.

How Did The Market Perform Against Your Strategy?

Finally, it is also important to evaluate our markets. We might have performed well in terms of profit and loss. However, it could be due to unusual market occurrences which will not continue. If that is you, then it is prudent to be aware of this going into the year’s second half. On the flip side, you may not have met your goals, but it could be that your market performed out of the usual. For you, it may be time to adapt in some way, shape, or form. 

The behavior of the markets we trade,  the times we chose to trade them, and the duration of our trades should be analyzed from time to time, especially if we are struggling to meet our reasonable goals. 

Suppose you conduct this self-analysis and grade yourself positively, then hats off to you. Although, I’m confident that an objective and critical assessment of us all should be able to highlight growing edges, even in the best of us. 

Likewise, if you graded poorly on your midyear assessment, then you might consider this to be an intervention. The good news is there is still time to work on your growing edges and close the year with some positive momentum that can spill into 2022.

Remember, we cannot buy time, nor can we retrieve lost time. However, we can manage our time responsibility by making the most of our left time. If you are like me, this year feels like it is flying by too quickly. So make sure to enjoy life, but don’t let this mid-year evaluation pass you by. 

These are just a few good ideas to prompt you into your mid-year reflection. Perhaps you have other pertinent questions and ideas that need answering when evaluating yourself. 

Trade Well!