The year of 2013 has been full of bears claiming they have found the top and it is time to hike back down. However, each time this happens the bears have been gravely disappointed when they realize the mountain continues as they begin to descend the first peak.
2013 has been a year in which I have grown immensely in my trading process. Witnessing something over and over again and learning through repetition I have been told is one of the best ways to learn a concept. Every couple of weeks in 2013 we have witnessed couple percent pullback or consolidation phase. These phases have been all different shapes and sizes but at the end of the day they all mean and act the same way. Using hindsight to learn is perfect and highly recommended, using it to claim you knew what was going to happen and telling someone what they SHOULD have done is not. Below is a chart of 2013 with all the different short term ‘peaks’ we have been to on this seemingly never ending hike on the mountain.
In hindsight this chart looks absolutely beautiful, perfect consolidations and then clean breakouts. In reality in it is never that easy, the breakouts will fail and the patterns don’t look near as ‘pretty’ in real time. Someone who wants to be a trader can easily look at a text book chart like the one above and believe they understand the patterns and they are now ready to trade. Someone who has hiked the trail a few times will understand it is much more complicated that just that. Someone who truly wants to understand the market needs to understand and trust his process as he would himself. I could go into my process right here but I do not believe that is why you came to this post (if it is, I did do a post on my process here).
Going forward the likelihood of these patterns to repeat is extremely high. Will they be in the exact same, no, not at all. Will they be similar, of course, patterns repeat just as emotions and thoughts repeat in some fashion or another. The question is how you will react when they do. Everyone has a different way of looking at charts and trading the market, just as everyone has a different fingerprint. Having a process to fall back on is required, without it you are lost and not following the trail up the mountain.
Take the rest of the weekend to review your year, reflect. Maybe it has not been what you wanted, ask why? Maybe it was because you do not have a process? Your process is flawed and too complicated? Whatever it is, it is always a good idea to every few months to take a step back and look at the map to make sure you are still hiking on the right trail to the top of the mountain.