Most traders look at one metric on December 31st: Profit & Loss (P&L). If the number is green, they pop the champagne. They tell themselves they are geniuses. They double their position size for January. If the number is red, they sulk. They blame the market, the Fed, or their broker. They promise to “try harder” next year. Trading psychology is a funny thing – you can convince yourself that both things are true at the same time.
Both of these reactions are dangerous. P&L is a liar. In the short term, you can make money doing stupid things (luck) and lose money doing smart things (variance). If you judge your year solely on your bank balance, you are confusing “Outcome” with “Process.” This is important: I made a profit on my first trade ever. I understood nothing about what I was doing, I just impulsively jumped in, and it worked. And, conversely, I have lost on trades that any analyst would think are nearly guaranteed. You cannot judge your trading on one trade at a time. It is all about having a good process, and following that process.
As a Consultant, I spend my life reviewing businesses financial documents. And let me tell you – even those documents lie. Think of a business that makes a profit, but has delayed essential maintenance on everything key to their long term success. Is that a good business? Conversely we all know of businesses that go on to be huge successes, but booked losses for years because they didn’t stop growing. Tesla booked annual losses from 2010 through 2019. It first showed a profit in 2020. And in 2023 it booked a $15 billion profit. The P&L statement didn’t tell the whole story.
So what about your trading? What about mine? Once a year, I fire myself as a trader. Then, I conduct a trading audit to see if I should re-hire myself.
The Interview Question
Imagine you are the Risk Manager of a multi-million dollar Prop Firm. You have an unlimited budget to hire traders, but you only want the best. The 2025 version of “You” walks into the office. You have the logs of every trade they took this year. Would you give that person capital?
Be honest.
- Did they move their stop loss when the trade went against them? (Immediate Fire).
- Did they “revenge trade” after a loss to try and get back to even? (Probation).
- Did they take setups that weren’t in their playbook just because they were bored? (Warning).
- Did they follow their rules even when it was painful? (Hire).
Trading is a job you give yourself. If you are trading your own capital, you don’t need anyone to approve the hiring decision. But think about every company you have ever worked at: were there not people that were above average, and others below? Have you ever worked with someone and wondered “how did they ever get this job?”
Or – have you ever had to let someone go? I once had to let someone go not because they weren’t intelligent, or didn’t work hard. They weren’t fit the company’s needs at that time. So what about your personal, private, trading company. Are you a net asset to the firm of you?
The 3-Point Audit
I don’t set “New Year’s Resolutions.” I don’t say, “I want to make $X this year.” That is an outcome I cannot control. Instead, I audit three specific areas of my Standard of Performance.
1. Compliance (The Rules) Did I respect the Absorbing Barrier? Did I honor every single Stop Loss? If I violated a risk rule—even if the trade eventually made money—that is a failure. In my audit, a profitable trade that broke the rules is scored as a Loss. It reinforces bad behavior.
2. Emotional Stability (The “Tilt”) Review your worst days. Not the days you lost the most money, but the days you felt the worst. Did you spiral? Did you start clicking buttons just to feel something? If I see a string of rapid-fire trades in my journal (e.g., 5 trades in 30 minutes after a loss), I know I lost control. That is a red flag on the audit.
3. The Data (The Boring Stuff) Did I journal every trade? Did I backtest? Am I treating this like a business, or am I treating it like a video game? If my journal has gaps—weeks where I didn’t record my trades because I was “too busy” (read: ashamed of my losses)—that is a lack of professional integrity. All successful traders journal. Do not ignore this crucial step. This is a fireable offence.
The Verdict
If you look at your 2025 performance and realize you wouldn’t hire yourself, that is okay. Most people wouldn’t. The market is full of amateurs who think they are pros because they caught one lucky bull run. I know – I was one. Buying BTC a week after I first learned that cryptocurrency had its own exchanges didn’t make me a guru. It didn’t even mean I was good.
But you have an advantage. You are the Boss and the Employee. You can look at the “You” of 2025, thank them for their service, and let them go. Then, you can hire the “You” of 2026. The new hire doesn’t care about making back last year’s losses. The new hire cares about one thing: Executing the System. Once you have been in a job for a while, you start taking liberties. But your first day – you follow the rules as though someone was watching you, because usually on your first day, someone is. Well the market is always watching you trade. Follow the rules.
Don’t resolve to make more money. Be determined to be the kind of trader a professional firm would trust with their money.
