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#CEMENT BOOKENDS HOW TO#

Did you have faith in your signals to make money over the long term?.

Did you have faith in yourself to follow your plan?.

What were your thoughts during each stage of the trade?.

What would you have done differently to maximize the size of a winning trade?.

What would you have done differently to minimize the size of a losing trade?.

What errors of execution did you commit if any?.

What is your risk/reward ratio based on your entry level versus your profit target?.

Your profit target expectation and why.

Your initial stop-loss plan if the trade moves too far against you.

How do you feel about entry? What are your expectations?.

Your entries and why you chose to enter at that price.

Here are ideas for what to document during each trade, take what is useful to you as you zero in on your errors.

The rules for total risk exposure and correlation limits.

Your position sizing parameters are based on volatility.

The quantified entries and exit signals you will be following.

The quantified principles of your profitable trading system.

Are all the items on your watchlist liquid enough to trade with little slippage in the bid/ask spread?.

Your watchlist that meets your filter parameters.What are the long-term backtested results of the signals you will be using through multiple market environments?.Quantify your statistical risk of ruin.Your risk tolerance for individual trading losses and total account drawdown limits.Your return expectations for your effort.Your trading journal should document the following things:

#CEMENT BOOKENDS HOW TO#

How to Create a Trading Journal and Find Your Edge in the Markets A trading journal can be a notebook, on a spreadsheet, or using advanced software, however, you like doing it. How exactly you keep your trading journal is not as important as whether you do or not. You will lose money over the long term if you have no edge or if you have one but not the discipline to implement it. If you have a system with an edge and follow your process you will make money over time in the markets. The goal of good trading is not to make money every time but to follow your trading systems, entries, exits, and position sizing with discipline every time. With the data and patterns you see from a detailed trading journal, you can see both when you were disciplined and when you failed to follow your plan and why. A trading journal can document your mistakes and quantify where you are going wrong. The major causes of being an unprofitable trader are having no edge, mental mistakes, bad risk management, or all of the above. Having a great trading plan and following that plan consistently are different things. Writing helps clarify your thoughts, identify your errors, and become mindful of the emotions that lead to trading errors. Keeping an up-to-date trading journal makes you put your feelings, thoughts, mistakes, and risk management issues along with emotional and ego problems on paper. Your edge as a trader is the advantage you have over other traders with your system, psychology, risk management, or trade management that creates your profits from other’s losses. It helps you see your past mistakes so you don’t repeat them in the future. A trading journal is a trading book you write about your journey, system, risk management, and lessons learned, says Steve Burns of New Trader U.