New Year Resolution: Financial Perspective


If you’re reading this, then congratulations! You have made it through yet another year of living.

While for some New Years is just another day, for most it’s a milestone which is celebrated with rejuvenated resolutions and feelings of investing in themselves. And while we are on that note, why not gauge into what resolutions can actually help our trading accounts shine bright like a Christmas tree this year?

Firstly, anyone feeling a slight chill of rising inflation in the air currently? Well, be sure you’re well covered and don’t buckle when the weather changes. Markets are worldwide prepping for at least three rate hikes in the US of America in 2018. Globally, recovering inflation has been on the To-Do list 101. The Fed sees core inflation rising 1.9% in 2018. Historically, inflation has ranged between (0-2) percent since 1950. Stocks traded at an average multiple of 18.1X earnings. At 2% to 4%, the multiple slips to 17.2X. Stocks that are sensitive to rising interest rates—utilities, telecom companies, consumer staples would be particularly vulnerable. Particular investments should do well if prices rise.

Secondly, and what comprises of the second half of the resolutions to help become a better trader, there are some equivalents of trying to beat ‘old habits die hard’ mentality.  

  • The first fatal mistake that most traders make is trading without a predefined plan. Experienced traders do not get into a trade without a well-defined plan. They know their entry and exit points, the amount to be invested, the maximum they are willing to lose and so on. Sometimes, even if young traders have a plan, they may be more prone to abandoning it if things do not go their way. They might even reverse their position altogether (for example, they would go short after initially buying a security if the price start declining), only to end up getting washed out.
  • Perpetually be on the learning curve. That’s perhaps the best way to stay ahead and always remain abreast with upcoming trends and opportunities.
  • Getting overboard is also a detrimental factor. Fear and greed creep in as impulsive behavioral impostors, something that alters with circumstances and the side of the see-saw that you are in. Trading too frequently can often erode your returns to the point where nice profits turn into significant losses. Every, minute having access to multiple opportunities, makes investors impulsive and more often than not it results in regret. Some traders fail to realize that success isn’t so easy and it will take some time. Traders are often too eager to jump into a trade as soon as an opportunity arises, in the hope of earning quick money, without doing a proper research. Impatience to look at these matters could result in loss of money. On the other hand, patience may not allow you to make a quick buck but it eventually pays off as it enables you to take a breather and wait for the right trading setup.
  • Instilling discipline is a factor that can be put into effective use by one and only, you!!!

That being said, we hope you gallop into the battle field with more sound knowledge and better grasp at lost trades. Like the year itself, resolutions come and go; however, changes you make to improve yourself will stay throughout. Brace for yet another bright year ahead.

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