Thoughts of a trader.

It’s the end of the year, which is the equivalent to a slow death by paper cuts for the average trader. The liquidity of the markets get less and less everyday, and the movements are a lot like watching paint dry. It is truly better to be anywhere but in front of your computer. When you do get a signal to take a trade, you are better off taking profits a bit quicker than the rest of the year.

So what is a trader to do? First and foremost, you should go on about your life. I know a lot of traders that can’t seem to do this, as trading can become all-consuming for them. This is not healthy at all. It is so common, a recent commercial here in the United States  for a stock broker features a guy saying, “Me….if I’m awake, I’m thinking about trading.” Not good.

If you feel the need to be doing something trading related, then perhaps it’s a great time to start reading books that you have undoubtedly collected over the course of 2009. A lot of hidden gems are probably just waiting to be discovered. Also, it will still keep your brain working, but it won’t cost much money. An errant trade in December can get pretty ugly.

Also, I have found it’s a great time to look at possible trends for the coming year. My post about the NZD/USD is a perfect example. Take a look at all factors, and see if you can get a read on what might happen next year. (Notice I said might and didn’t say…place your trade now and get a head start on everyone else.) Look into fundamental factors as well as technical ones. I could possibly set a good bias for next year.

Also, look into other markets. I have really been delving into the VIX lately. It can be used for directional bias for several markets. I haven’t ever really thought of it in the ways I have been using it lately. It has been a bit of an eye-opening experience to say the least. (Perhaps I will write about it one day, once I feel I am qualified.)

None the less, have a good holiday season. The markets will still be here in January. As a side note, don’t rush back into them. I would venture to say the firs Non-Farm Payroll is what most people will be waiting for. That’s January 8th. You also shouldn’t really trade that particular day either…..so it’s a good bet that January 11 will be the first “normal” day next year.

Happy Holidays!

Chris