2016 was a year where I learned a tough lesson in trading. The lesson was how dangerous it is to become complacent. I’ll be honest from 2011 to 2016 90% of my trading income came from two simple strategies that I was able to do day in and day out. These strategies required some simple maintenance and tinkering from time to time but for the most part they were pretty mechanical and easy for me to execute.
In 2016 the first of these strategies started dying and then stopped working completely. I believe what I was doing became too wide spread and well known and my edge simply disappeared. I didn’t panic then since my other strategy was working well still, but then the returns on that one started dwindling as well.
You can see here my 2016 results
You can see I made considerably less than my previous years(2013, 2014, 2015). Making less money didn’t scare me, what scared me was my confidence and ability to make money day trading was quickly eroding.
My error and HUGE mistake I made was becoming too complacent with my trading. I was making a very good living and thought it would continue forever. The reality is that those two strategies only took up a couple of hours a day. I had a lot of time to press harder, learn more, get better but I just didn’t. I was just too comfortable trading the way I was…hey, everything seemed like it was going great, so why change it?
I’m now starting 2017 developing completely new strategies and approaches virtually from scratch, I wish I worked on this more when trading was going well but c’est la vie.
My lessons to take away from this experience are: Comfort and complacency are your enemies in trading. The market is constantly changing as you should be. Always be pushing to learn more, do more, be more.