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Why Traders and Investors Should Be Making a List and Checking It Twice

While there's still a few weeks left before 2012 is in the books, it may be a good time for traders and investors to take some time to reflect on an eventful year. While past performance is no

While there’s still a few weeks left before 2012 is in the books, it may be a good time for traders and investors to take some time to reflect on an eventful year. While past performance is no guarantee of future results, an honest self-evaluation of the year’s portfolio and the trades that were made will no doubt be helpful in refining ones strategy and decision making going forward. Revisiting both winning and losing trades, and the rationale behind each move, is a good way to evolve and grow as an investor or active trader.

In this week’s interview with Toni Turner of TrendStar Trading Group, we discuss the importance of building on the momentum of a good year, or regrouping from a disappointing one to rebound as 2013 approaches.

EQ: With only two more weeks until we hit the holidays, traders and investors may be looking to wrap up their year. Do you have any tips for them in terms of looking back and evaluating their performance in 2012?

Turner: First, we have to start with facts. Are we making a profit or posting a loss for 2012? We have to look at that with clear eyes. Next, we need to drill down and examine where we went wrong and, more importantly, where we were right so that we can build on our strengths as traders and investors. That’s one of the easiest and most important things that we can do.

As traders, we need to make a New Year’s resolution to eliminate  mistakes—such as impulse trades– and only take trades for which we have established well, thought-out plans. For investors, just like traders, we need to see which strategies worked and which didn’t in order to make investments for 2013. I believe we will see economic shifts in 2013 and a really good New Year’s resolution for all of us is to watch for new emerging trends in 2013 and look for opportunities that they will provide.

EQ: Holiday weeks are usually a bit more unpredictable as most of the market goes away. Do you have any tips for those that plan to stay active during the end of December and early January weeks?

Turner: Volume usually tapers off during the last two weeks of the month. In the old days, before the 2008 bear market, we would see low-priced stocks get a boost during the  last part of December, because people would use their end-of-year bonuses to purchase these stocks. I still tend to wander around looking for these high-quality, low-priced stocks because many times they will move. Of course, it would be great to see a Santa rally, but a lot of that depends on the outcome of the fiscal cliff. So until the President and Congress get together and find a resolution for that challenge, we may continue to experience this wait-and-see kind of market.

EQ: As traders and investors look ahead to 2013, and depending on their performance in 2012, how can they build on the momentum of a good year, or recover from a bad one?

Turner: As I mentioned, all market participants need to evaluate their performance and raise their “knowledge bar” in order to be profitable. I’m a very big believer on raising the bar on myself every year and driving for a new level of excellence. My choice is always to pinpoint my strengths and build on them, and eliminate my limitations. I find that my biggest winners every year are stocks and ETFs that I can build a strong case for entering before actually entering them. Perhaps there’s some sort of catalyst from the current economic environment or trend that makes it  a sound target. Then I watch for a really good entry point based on my setup criteria.  When I take my time to investigate, watch the stock and see how it trades, and then get into it at the right price, experience tells me those kinds of trades have been  my biggest winners. Again, we need to concentrate on our  strengths and avoid any actions that we know that are going to hand us losing positions.

EQ: Are there any specific sectors or groups that you’re watching this week?

Turner: If the fiscal cliff comes to a positive closure, I’m watching the Materials Select Sector SPDR (XLB). Another ETF I’m watching is SPDR S&P Biotech (XBI), which seems to be be ripe for a move higher. I’m also watching an ETF you don’t hear mentioned much, and that’s First Trust ISE Cloud Computing Index (SKYY). I’m keeping an eye on that despite it being a little overbought on the short term. I believe  that cloud computing is still going to be one of the major trends in the future.

The astronomer Carl Sagan said, “It was easy to predict mass car ownership but hard to predict Walmart.”