46%

It's official. Another year in the books. My trading account had a whopping, ridiculous, outsized total return of 46% in a year when the broader market as represented by the DOW was up a measly 6.5%. A sideways market with increasing volatility as the year went on.

To be blunt my performance was nothing short of spectacular. It really is that simple. I'm one college dropout that should be trading for Soros. Maybe not yet.

My year started off slowly though. Real slowly. Found myself basically flat (up a touch) on July first. Then I proceeded to knock the cover off the ball. The final six months of the year I did no wrong, 6-0 down the stretch.

In August when the market got hammered my trading account soared 12% for the MONTH. Yet when the market rebounded sharply in September I was up another 8.5%. November saw another swoon but I was up again, 8.6% this time. So in the second half when the markets gyrated violently in one direction then another I profited regardless of direction- though mostly on the short side.

Reading everything within reach related to trading over the years I have developed a theory. Trading is a lifelong challenge. Traders will tread water for years. Many will blow themselves up or give up in frustration while others may lack the discipline necessary to become consistently profitable in the markets. Some of those who stay in the game will at some point maybe after 10 or 20 years have it just "click". It all slows down and starts making sense and you essentially turn the corner into the promised land of consistent profits.

Like a second or third year NFL quarterback who talks about the game slowing down. You've thrown some interceptions, gotten hit and now with experience and maturity have a better understanding of the game. Some traders are Ryan Leaf, never maturing. Others are like Rich Gannon who was a journeyman who shined late in his career. John Elway is one in a million talent and those are your odds at that kind of success.

So there have been a couple of times over the years when in the midst of a big winning streak I wonder to myself if I've "clicked". Very shortly thereafter I proceed to blow myself up with a series of awful trades.

Well here I am again.

This time there are some key differences. I have in the second half been banking coin on many different positions long and short whereas before it was a big bet on one good idea. Basically position sizing. No one thing is going to blow me up so I have eliminated risk and taken some of the volatility out of my returns.

Secondly, when a trade is entered my primary concern is risk not profit. Risk should be defined beforehand. I'm generally unwilling to risk much and have cut my losers religiously.

I've worked harder and been more disciplined then ever before.

So entering 2008 I'm filled with anxious anticipation. We'll soon find out whether or not it has "clicked" for real. Furthermore the market backdrop is dramatic and the scene is set for some very serious fireworks. I just love what I do. Can't wait to see what happens next. We are absolutely living in a period of time that will make the history books of the future.

If I should spend the early months of 2008 destroying my trading capital crashing back to earth it will only be a temporary setback because I sense that I'm getting closer all the time.