2021 Is Coming to a Close
Whether you enjoyed 2021 or felt it was more of a prison sentence is nobodies business but your own. What is other peoples business is TAX. I know, no one wants to talk about giving away hard earned money to the phantom eye in the sky but in a lot of countries this is mandatory. If you are lucky enough to live in a country where you don’t need to give your money away – be happy and move to the next section. For the rest of us, pay attention.
Now, I’m not a TAX guy so please, consult with someone who is. What I will tell you is something most people won’t. Generally speaking, if the market is somewhat sideways or slightly down, traders will close all of their positions and then reopen the same positions. Why on Earth would you do that? It makes for much easier taxes. Will all your positions closed you can do a snapshot of your holdings and this way they don’t roll over into the next year. This sort of gives an end date to these positions. Doing this year after year around the same date allows you to avoid paying the short-term capital gains, so long as you held the position for longer than a year.
Short term positions will always be short term positions. Some traders will leave these open as the close just to re-open won’t be much benefit to them. This is also the time traders make withdrawals from their accounts so they can pay their taxes owed over the year of trading. This we usually see much closer to the end of the month but if you want to get a head start and already figured out approximately what you may need, then go for it.
Is there anything else I should do?
A lot of traders do not enjoy the administrative side of trading and so they push it off, month after month after month until they have no choice but to handle it. Fear Not. Use the end of December to right all the wrongs of the year and start cleaning things up.
This goes for your Journal. Slot some time to analyze your journal and figure out how your strategies have been holding up. Take a step back and look for any oddball patterns that could help you as a trader. Look for the less obvious patterns like performance per day, performance after “x” amount of trades, etc. Now is the time to dive deep into that journal and make any corrections or add or remove and relevant columns from a spreadsheet.
Clean you Wallets. If you use an online wallet or wallet extensions as opposed to Exchange Wallets, you have likely collected a bunch of garbage in there. From Scam Coins to LP receipts and random NFTs you completely forgot about, it’s time to clean them up. There are ways you can remove the authorizations you have signed over for your wallet and it’s a good idea to spend a day making sure everything is correct. Your wallet is always subject to scammers and hackers, so keep it secure and keep it free from unwanted access.
Update your software. From operating systems to trading platforms, there is likely something that needs to be updated. That slightly banged up keyboard that you never got around to replacing – DO IT NOW and get it over with. I personally renew my subscription for TradingView every Black Friday because that is the cheapest TV costs all year but Christmas is coming and that new keyboard or mouse will likely be the lowest you see it all year. If you are in need of a new computer or phone or desk or lights or whatever, spend a day to figure it out and get it done. Start the New Year fresh with good working equipment.
Clean Your Trading Space. This sounds trivial too but a once a year super deep clean in your trading environment can do wonders for your mental trading health. Re-arrange the pictures, add new pictures, paint the walls, refinish the floors – whatever. Do something to make it fresh again, to make it enjoyable and to make it yours. Be excited the next time you walk in to tackle the markets.
Reward yourself! Ahh, the best one. You’ve made it to the end of the year – a milestone event for any trader. Take a minute and reward yourself. Whatever it is can be totally up to you but really think about making yourself happy. A small pat on the back for surviving this market can go a long way and will be something to look forward to all of next year.
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