Wednesday, August 10, 2011

Great post regarding the value of reviewing your trades

Since the markets seem to be too choppy for me at the moment, I'm doing my best to stay away.  I saw a tweet from @smbcapital regarding his post about two lessons from an improving trader.  Bella is posting some great topics for folks like me still finding their way, and this recent post discussed the value of reviewing your trades.  I left the following comment their website:

Thanks for continuing to post great topics.  The letter from your reader hit home with me, since reviewing my trades has also helped me significantly.  Here's what I've recently done:

I've taken the last several months of trades and imported over 900 historical trades into an online trading journal a couple weeks ago.  For those who don't have a trading journal setup yet, is a great new online trading journal that's free.  I really like it after reviewing many others (free doesn't hurt), and the reports are also useful.  Simple and elegant to use, but powerful.

By reviewing each of my historical trades carefully one by one (and trying to relive the moment -- why I took it, how I felt, etc.), and then writing journal notes and placing appropriate tags with useful metrics (grade, setup type, outcome, market conditions, target met or not, etc.), I can run reports to see what setups are working for me, how much those setups make, win/loss %, how well I executed, what type of trades are NOT working for me, etc.  To get these types of reports, the "trick" is to spend the big effort to add meaningful tags into your trade journal records. 

As you, Dr. Brett, and others have mentioned, I want to focus on my strengths.  This journal is helping me significantly to discover what my strengths are, via facts from my actual trading results.

Updating each trade is taking a lot longer than I expected (it's a real grind) and I'm not quite done yet.  But with what I have so far, what I'm learning about myself is on the verge of shocking, or maybe not.  It's now easy for me to query how I would have done if I only took A and/or B quality setups (surprisingly big money with good accuracy), how much money I lost in "choppy" conditions (a lot), how much I lost when I took a trade while in tilt/revenge mode (don't even want to think about it), which setups work best for me, etc.

I'm also realizing that like an elite professional athlete that continues to reviews their tapes, monitors their stats, performs their drills and practices at 110%, etc., I will also need to maintain this high level of effort to understand and improve myself on a daily basis.  This level of effort has become the new normal.

Thanks again!


Mila Roze said...

Can you please add a link to his Twitter page? And of course if you have any other great Trading on line gurus, I would love to read some of their inputs as well.

mandy said...

Reading your post was very inspiring. I wish I was as hardworking as you are in options trading and in any other field in my life. Keeping a journal is a great strategy but it requires so much time! I would love to hear more online trading sites recommendations from you.