By keeping accurate records of your trading habits, you are creating
a wonderful tool for looking back in objective
and recognizing problem areas. It is especially helpful if you are
struggling with your trading and don't know
exactly where you are going wrong, or if you are caught in
the stop-blowing pattern.
By looking for common denominators in your bad trades, you can learn
where your weaknesses are, and which type
of trades you may be better off avoiding. It will also become
much clearer to you where your strengths lie, and which
types of trades best match your abilities and personality.
The idea is to do more of what works, and avoid what doesn't.
That may sound simple, but many times that really doesn't become
clear until you have gone over your records and
done some reflecting. You may find out things about your
own trading that surprises you!
more complete your journal is, the better a tool it becomes. Obviously
you want to include the information of entry
price, exit price, and the outcome of the trade. But the information
that will really help you the most will be things like
your expectations for the trade, the patterns you were working
with, and how the outcome compared to your
expectations. You will also want to record the reasoning
for your trades, your thoughts at the time, and how you felt
about the trade. In these kinds of journal entries is where
you will find the true jewels of information. Many times, re-
reading those passages, you will find light bulbs suddenly
generally keep my journal in a spiral note-book sitting next to
me for easy access throughout the day. It is messy and
full of whatever insights or thoughts occur to me at the
time. Personalize yours to meet your needs.
As always, let me know if you have any questions or need any help.
Shawn Wolff-Klug aka Gimmie Gimmie@mtrader.com
of Play - (1.
Observation, matching criteria to trade 2. Paper Trade using realistic
paper trading technique
Real Trade, small # of shares 4. Real Trade, larger # of shares)
– (First Day News Gainer, Second Day News Gainer, First Day News
Dumper, Second Day News Dumper,
Short Pre-market, Open Short First Top, IPO, Breaking News Play,
Continuing Momentum Basket Stock, Small
News Stock, etc.)
for the play
– (50 cent climb based on patterns, indicators and macro-momentum;
Small scalp with no
upside target; Fall from open based on current patterns of second
day gainers and current macro-momentum;
from the first bottom based on current dumper patterns; Break out
from current price based on increased pace of
as news began receiving attention; Direction change at a double
top or bottom; Climb or fall from pivot, support,
resistance, based on macro-momentum and indicators. Whatever your
reason, the point is to have one!)
Reward, Target Price
– (rough target)
did I arrive at that target?
– (based on recent patterns, average 5 day range, market momentum,
support/resistance barriers, etc)
Risk, Stop Price
did I arrive at that stop?
- (based on previous support/resistance, low or high of day, etc)
– (is that ratio reasonable enough to justify the trade?)
- (Pay attention to the time of day in relation to high percentage
of the Trade
– (Stopped, Gain, or Loss)
my expectations met? (Yes
not, why do I think that is? What went wrong? (I
didn't have my expectations clear in my mind. The trade became
exception. I was incorrect about the market momentum direction.
I failed to look for potential: I failed to look for active
pace. Slow time of day. Pace did not match my abilities, I
mis-read the bottom. I chased. I hesitated and waited too long
to exit. My executions were too slow. Pattern changed, etc)
did I feel about the trade? (I
made a good gain and I feel great! I blew my stop against all better
am disappointed in myself. I do not understand why it went against
me and I am confused. I made a gain but I am still
confused about how. I played an IPO even though I know better
and I am kicking myself. I played a fast, wide-ranging
with too many shares and it was impossible to keep less than a 50
cent stop and I am not going to do that again.
was having a fight with my spouse and my judgement was altered.
I was under the influence of cold medication and my
were slow. Anything that pops into my head at the time)
I am met with a serious loss, blown stop, or more than three stops
in a row, I will take one step back in the level of
reflect on my journal, and not continue forward until I know the
reasons for my errors and feel capable of confidently