Wednesday, September 12, 2007

Creating and Managing a Trading Journal

Digg this

I saw this article from Toni Hansen's Online Trading Blog.

It is about Creating and Managing a Trading Journal, below are a few points that I think I can use it for my journal here and be able to improve on.

  • It is a great deal more constructive to use charts in your trading journal.On the top of the chart in the corner I write what the pattern I traded was. I also write the symbol, sector, entry time, price, exit time, price and gain or loss there.
  • Then on one side of the chart I write my pros and on the other I write my cons. On the chart itself I mark all relevant info: support and resistance, trend lines, volume, etc. so that when I look back at my chart, I automatically focus in on the main points that helped me decide to take the trade. Then, under my chart on one side I write the things that I did correctly and on the other I write down things I could have improved upon. I then organize my journal according to patterns.

  • At the front of each section I then have a list of pros for that pattern and cons for that pattern which builds on itself as I learn. I also have a sheet that lists things I constantly do correctly on that pattern and my most common mistakes. Organization is essential. Your journal must be something you can actually learn from. If you want, you can add equity curves. These can help you narrow down times of the day or week where you trade better and even times of the year. On an equity curve I'd suggest marking significant life events as well.

  • One review method that works really well following a trade is to cover up the outcome and walk through it bar by bar as it develops to help cement that progression into my mind. It allows me to focus more clearly on the key points as a pattern develops that I might not have seen initially. That way I can recognize it more quickly the next time you see the same action forming.

After reading Toni's article, I'm happy that I do practice keeping this journal and it is easier to discover a trading pattern. By just a click I can see what I've done right or wrong for the same strategy in the past. I really love blogging, it is very organize and systematic.


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