thinkMoney - Winter 2021 - 50

January 2021

In this issue:

  • New Year, New You: Hitting the Reset Button
  • Don't Follow the Money (Follow the Greeks)
  • Trading Futures and Hedging Your Appetite
  • Taxes: The Business of Running Your Trading Business

Happy 50th!

• FIFTY ISSUES OF thinkMoney—wow! It’s hard to believe it was all the way back in the summer of 2007 when we published our first issue and forever changed the way trading conversations take place. We’ve seen a lot of change over the last 14 years, but one thing remains constant: there are always trading opportunities.

Take 2020. It was certainly a year to remember—the pandemic, the social unrest, and a tumultuous U.S. presidential election. What started out as a strong year for the markets swiftly changed when the COVID-19 reality hit. The markets plunged, but then quickly recovered, with the major indices hitting record highs. Can you say “volatility”? And now, the question on traders’ minds: Can we expect to see volatility continue?

Here’s another certainty—a new U.S. president means things will look different in the new year. But that doesn’t necessarily mean the markets will be complacent. Even though full-scale  distribution of a COVID-19 vaccine could be around the corner, life might not return to “normal” for a while. In some cases, a new normal has emerged, permanently. And if we have a divided Congress, which Wall Street seems to favor, “gridlock trading” could be back in vogue. As we’ve always said, uncertainty equals volatility, which equals opportunity. And that, at least, could be good news for traders.

How can you prepare for volatility? A good place to start is to ask yourself what lessons you’ve learned from 2020 and how they can help shape your trading strategies moving forward. Take a moment and think about what hurt or helped you last year (this is good advice for any year). Did emotions influence your trading decisions? Did your analytical tools fail your system? Did you have trouble managing your trades? This issue’s cover feature, “New Year, New You: Hitting the Reset Button” (page 16), lays out some different paths you could follow to give your trading strategies a recharge. It’s a new year, and if you want to trade the long game, you need to adapt as conditions change.

Another long-game tactic is adding tax planning to your to-do list. Nope, taxes aren’t fun, but staying on top of them can go a long way toward easing the pain of Tax Day. You’ll find helpful tips and strategies in “The Business of Running Your Trading Business” on page 28. Getting a head start on tax planning could take a lot of weight off your shoulders and free up more time to engage with the markets. And that’s a great resolution to make for the new year. Wishing you all the best for 2021.

Happy trading,

Kevin Lund

Editor-in-Chief, thinkMoney