The New Year seems to always bring great hope for change and self-improvement. For financial traders and investors, the New Year is also a time for critical self-reflection. It presents the opportunity to close out a year, log or annual return, and begin a fresh start. Undoubtedly, if you haven’t already, taking the time to establish some New Year’s resolution for your investment portfolios is one of the best ways to ensure that you are putting your best foot forward in improving your performance in the new year.
To help you get your investing off to the right start this year, we compiled a few ideas for realistic New Year’s resolutions that will add benefit to your investment portfolio in the months and years ahead.
Take the Time To Reflect On 2018
The beginning of the New Year is a traditionally a time to regroup, reflect, and begin planning for the year ahead. Before dwelling into your investment strategies for 2019, you first need to determine your financial hopes, goals, and aspirations. As you thoroughly consider your investment goals for the new year, be sure to pay attention to the basics, such as risk tolerance, timing, and the need for short-term as well as long-term income. Remember to write things done, take plenty of notes, and actively seek out new strategies to expand your portfolio.
Clearly Define Loss Limits
Losses are second-hand in trading. However, the fear of losing money should not deter you from entering the market. It should, however, make you conscious of how much you are willing to lose before exiting a trade. It is essential for traders to set an absolute limit on how much money they can afford to lose on any given position. This includes setting daily, weekly and monthly loss limits and making use of trading tools like stop-loss and take-profit orders. By utilizing these tools, you can avoid blowing out your portfolio on one or two bad positions, or even worse, going into debt.
Develop an Asset Allocation Plan and Stick To It
A traders investments should include a diverse array of stocks, bonds, and funds that match their risk tolerance and long-term investment goals. If that isn’t the case, they should create an asset allocation plan that best fits their needs. A trader’s asset allocation should be a roadmap to a rough percentage of stocks, bonds, and other assets in their investment portfolio. Whatever you do in the new year, don’t avoid asset allocation or you could be in for a tremendously unpleasant surprise somewhere down the road.
Devote Enough Time To Trading. No More, No Less
One of the biggest investing mistakes traders make is having a lack of focus, especially for those traders who are accessing the markets on a part-time basis or around a busy schedule. Not having a focused approach often leads to counterproductive practices, such as over-trading and multitasking. The best way to avoid these issues in the new year is to devote a certain amount of time each day to trading, free of distractions and multitasking habits. Committing a set time to trade can significantly help improve productivity this new year.
The power of the markets relies heavily on diversification. Stocks, commodities, currencies, option and innovative products, such as Exchange Trade Funds (ETFs) are simply a click away. Unfortunately, it is common for traders to tie up their time in only one or two asset classes, and by extension, one or two securities within those asset classes. In 2019, one of the main goals traders should have is to diversify your trading portfolio. Before the end of the year, traders should feel comfortable enough trading at least one asset class. Doing so can go a long way in helping traders mitigate risk and increase overall returns in the long run. The ability to diversify will also enable traders to better understand the financial markets and adapt the holdings of their portfolio accordingly. In a volatile global financial market, diversification is a crucial practice. Want to learn more about diversification? Check out our Investors Guide To Portfolio Diversification.
New Year, New Investment Portfolio Management Software
It is no secret that many of the top financial firms are now utilizing algorithmic trading to control investment decisions. Predictive analytics has come to the forefront by using stats, data analysis, and technical models to determine market patterns to forecast future performance. Automated trading systems are capable of mining a colossal amount of information and making trading decisions quickly based on pre-defined instructions. As traders enter a new year, realize that new trading technology is available that can help make the investment process much more simplified. Investing in algorithmic trading systems represents a win-win opportunity for investors seeking to optimize returns in 2019.
While your New Year’s resolution of working out every day may fall flat, these trading resolutions do not necessarily require long-term commitments. Whatever you do, don’t ignore your investments this year. By adopting the resolutions above, traders will be more likely to have a successful year of trading.
Utilize Automated Trading Systems This New Year
Large investment firms are already leveraging algo trading strategies and automated trading systems. If you want to hang with the Wall Street powerhouses in 2019, you need to be equipped with the right investment portfolio management software. That’s where AlphaDroid comes in. AlphaDroid automates your investments, helping you better analyze, construct, and compare investment portfolios. Our investment portfolio management software helps advisors by providing a precise and disciplined approach to productively catch the best days in the market and avoid the worst. To learn more about AlphaDroid and our elite investment portfolio management software, contact our team today!