We are half way through 2011 as another quarter has just ended and smart traders are reviewing their prior trades (metrics) and journal entries between back yard barbeques this weekend. This review can only occur if trade metrics are kept and journal entries made so if you don’t keep a journal or track your trade metrics you are missing out on an exercise that can’t not boost your profitability. Those traders that keep a journal and/or trade metrics but do it half-assed will not see the need to review the data and as such miss out as well. Winning traders are those that keep a detailed trading journal and have a process to cull out trade metrics to find common themes from the data.
Full-time traders should review their trading journals as needed and delve into what I call, theme searching, every quarter. When looking for themes here’s some ideas to get the cognitive juices flowing:
- What has worked and why?
- What was the status of the overall market? Sectors?
- Are there geopolitical issues impacting market correlations?
- Are there any consistencies in your emotions?
- Was risk defined and managed properly?
We are the most unpredictable variable in the game of trading. If you take the time to process every trade, not just the numbers but get to the meat of the position and why you did what you did, your trading will improve as you gain a better understanding of how you best fit within the market. I’ve always been a proponent of trading a strategy/system that matches your personality.
I believe that reviewing journals and metrics will lead you to that match much faster and with more capital than trying to trade some strategy a buddy makes bank with or a system some guy in a suit at the front of a hotel ballroom sold you.
Dr. Steenbarger has a nice collection of some online resources regarding trading journals. Do yourself a favor and Check it out. Enjoy your family and friends this weekend as you celebrate freedom!