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Keeping a Trading Journal Class Continued:
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KEEPING A TRADING JOURNAL CLASS CONTINUED |
| [17:14] <Toni> Have you seen this
page: [17:15] <Toni> http://www.tradingfrommainstreet.com/journal.html [17:15] <primelaw> no [17:15] <primelaw> Where are theses things on the site. I don't see a link. [17:15] <Toni> ;) [17:15] <Toni> The links from classes of days gone by..... [17:15] <Toni> Actually, this was created long before we had the current member's area [17:16] <primelaw> ok [17:16] <Toni> And since it's a topic we have not discussed recently, and I had someone ask a question in email that brought me to this subject [17:16] <Toni> I felt a great way to tackle it [17:17] <Toni> was in a forum where you guys can have the logs. [17:17] <primelaw> y [17:17] <Toni> So, I'm going to start with a quick walk through... [17:17] <Toni> First off... if anyone does not have trading journal, they should.. [17:17] <Toni> No ifs ands or buts about it [17:18] <Toni> as warrior put It.. [17:18] <Toni> ""evil, yet necessary task"" [17:18] <Toni> ""Evil"" in that it can be time consuming [17:18] <Toni> Most people can certainly find numerous excuses to not have one [17:24] <Toni> when you do your trading journal [17:25] <Toni> what do you have in it [17:25] <primelaw> I copy a qchart and annotate it, but it needs some of the things you have here. [17:25] <primelaw> I generally am confused about the market conditions during the trade, so my notes are very screwy [17:26] <Toni> Ok, well, first.. you are doing one thing correctly that most trader's forget [17:26] <Toni> they don't copy their charts! [17:26] <Toni> if you are a technical trader [17:26] <primelaw> Well, my memory is not that good [17:26] <Toni> which most of us in here are [17:26] <Toni> it is very very important [17:26] <Toni> to keep a visual record [17:26] <Toni> of your trades [17:26] <Toni> this gives you a better opportunity [17:26] <Toni> to go back [17:27] <Toni> at a later date [17:27] <Toni> i.e. on the weekends [17:27] <Toni> and go over the positions from the week [17:27] <Toni> and categorize them [17:27] <Toni> by trade type [17:27] <Toni> and compare the ones which worked out to those that didn't [17:27] <Toni> etc [17:27] <Toni> I suggest [17:27] <Toni> that all traders [17:27] <Toni> keep as detailed of records [17:27] <Toni> as they possibly can [17:27] <Toni> of their trades [17:28] <Toni> and reasons for their [17:28] <Toni> trades [17:28] <Toni> this way [17:28] <Toni> if something just pops into your head [17:28] <Toni> ""oh I’ve seen this pattern before!"" [17:28] <Toni> then you have a better description of it [17:28] <Toni> when you compare [17:28] <Toni> So, let's start with the bones.... [17:28] <Toni> date and symbol [17:29] <Toni> easy enough [17:29] <Toni> write down the day of the trade and what the symbol is [17:29] <Toni> one thing worth adding for comparative analysis [17:29] <Toni> is the sector of the stock [17:29] <Toni> then [17:29] <Toni> if you are getting really ambitious [17:30] <Toni> you can look within the sector and see how it fared overall [17:30] <Toni> One thing you can do [17:30] <Toni> to help pick the best setup in a sector [17:30] <Toni> is to look at a sector chart before even entering a position [17:30] <Toni> to compare relative strength and weakness [17:31] <Toni> and if it's a longer developing pattern, check out a few of the top names there as well [17:31] <Toni> This is something I do a lot at night with swing or position trades [17:31] <Toni> because you can take the added few minutes you might not have on a scalp or daytrade [17:31] <Toni> Next... is the position long or short? [17:32] <Toni> Now... we come again to a section where the more time you have before a trade sets up, the better [17:32] <Toni> Analyzing the Position: [17:32] <Toni> Pros & Cons.... [17:33] <Toni> If you only have a short list of stocks you are watching for the next day as swingtrades for instance... [17:33] <Toni> like the watch list I send out a few times a week [17:33] <Toni> then that evening [17:33] <Toni> go through [17:33] <Toni> and write down pros and cons for the position [17:33] <Toni> for instance... [17:33] <Toni> say you are buying a pullback in an uptrend [17:33] <Toni> a pro might be the 20 day sma support [17:34] <Toni> whereas a con may be that the pullback was more than 50%% or the 50 day sma is right overhead.. or maybe the market as a whole is getting topsy [17:34] <Toni> another pro on that could be declining volume on the pullback [17:34] <Toni> or that its only the second pullback in a new uptrend [17:35] <Toni> Next... what are the current market conditions? [17:35] <Toni> This is very important [17:35] <Toni> Because [17:35] <Toni> even with stocks [17:35] <Toni> that are not seemingly moving with the market [17:36] <Toni> will be affected by extreme reversals or news or strong market support or resistance [17:36] <Toni> news stocks tend to be affected the least [17:36] <Toni> so the overall market can make less of a difference for them [17:36] <Toni> esp during earnings season or warnings season [17:37] <Toni> Next... [17:37] <Toni> what are your expectations on the trade? [17:37] <Toni> generally speaking.. even if you let the stock take you out of a trade, you should have a general idea of what to expect from the trade [17:37] <Toni> For instance... [17:37] <Toni> say you are taking a breakout [17:37] <Toni> A stock had just made a phoenix [17:38] <Toni> and then fell into a sideways base or bull flag [17:38] <Toni> then we know [17:38] <Toni> that generally speaking [17:38] <Toni> we are going to look for an equal move [17:38] <Toni> meaning that the move on the breakout will be comparable to that going into the base or flag out of the phoenix [17:38] <Toni> so this is our expectation [17:39] <Toni> and if there is a resistance level like a 200 sma or such that is in the price area [17:39] <Toni> then we tie expectations to that resistance [17:39] <Toni> There I have this page a bit flipped [17:39] <Toni> in that next you should be looking at where you have a stop placed [17:39] <Toni> and why [17:40] <Toni> for a breakout, we tend to use under the most recent segment of the base [17:40] <Toni> or under the 20 sma [17:40] <Toni> and your reasoning would be simply that the lows of the base are support [17:40] <Toni> and that a moving average is support [17:40] <Toni> you can always go to shorthand once you know what you're writing about :) [17:41] <Toni> Next.. entry time and prices and the reasons [17:41] <primelaw> Longhand does not help my understanding.:) [17:41] <Toni> lol [17:41] <Toni> here for reasons [17:41] <Toni> they are also pretty simple [17:42] <Toni> generally you say your buy is over $ [17:42] <Toni> and let it break by a few cents [17:42] <Toni> but [17:42] <Toni> if you have a gap [17:42] <Toni> then you need to use a gap rule [17:42] <Toni> and this will alter your original entry price [17:42] <Toni> which is probably a good thing to add to this journal as well :) [17:43] <Toni> that way you can compare your setup trigger price [17:43] <Toni> to what you actually paid [17:43] <Toni> to see if you are having difficulties with execution, or adjusting entries, slippage, etc [17:43] <Toni> and [17:43] <Toni> I also add entry method [17:43] <Toni> (you can tell this journal is a bit old, but make sure to add these additions) [17:44] <Toni> for entry method [17:44] <Toni> I simply mean [17:44] <Toni> how did you place your order... [17:44] <Toni> stop order, limit, market, through which route, etc [17:44] <Toni> this will help you out [17:44] <Toni> if you need to experiment [17:45] <Toni> to get a better execution method [17:45] <Toni> Next [17:45] <Toni> what are your exit times and prices [17:45] <Toni> and if you had more than one then mention what those are and why [17:45] <Toni> if you have more than one [17:45] <Toni> examining this [17:45] <Toni> can help you [17:45] <Toni> see if [17:46] <Toni> it would be best to wait for your second exitable event to take all [17:46] <Toni> or if you are better at taking all at what you use for your first exitable event [17:46] <Toni> or [17:46] <Toni> it can even help you if you should be scaling in and out of a position [17:47] <Toni> And finally.. what was the outcome of the trade? [17:47] <Toni> Were your expectations met? [17:47] <Toni> if not why? [17:47] <Toni> if yes, why? [17:47] <Toni> right down both the things you felt you did wrong [17:47] <Toni> as well as those you felt you did right [17:47] <Toni> if you didn't hold to your target... then why [17:48] <Toni> this could be something you did right whether you realize that at first thought right now or not :) [17:48] <Toni> for instance [17:48] <Toni> say you are taking an afternoon breakout [17:48] <Toni> and the pace of the breakout is much much weaker than the move into the base prior to the breakout [17:48] <Toni> and maybe the market is weakening as well [17:48] <Toni> and then the stock pulls back sharply off the highs [17:48] <Toni> into the 20 sma [17:49] <Toni> instead of waiting for a stop [17:49] <Toni> or target you decide to exit on a bounce off the support [17:49] <Toni> this is generally a good thing! [17:49] <Toni> this is because what the stock is starting to do [17:49] <Toni> is forming the beginning of an avalanche [17:49] <Toni> and this way you can get out close to break even [17:50] <Toni> because if the support gives way, odds of a stock falling rapidly through your stop are greater [17:50] <Toni> whereas if the stock does recover at a later point and falls into a triangle for another breakout you can always re-enter [17:50] <Toni> So, spend a great deal of your time working on trade analysis [17:50] <Toni> what happened in the trade [17:51] <Toni> were there times you were particularly nervous? [17:51] <Toni> if so, why? [17:51] <Toni> with this analysis [17:51] <Toni> keep charts [17:51] <Toni> I will use a number of charts if I have time [17:52] <Toni> including a market chart [17:52] <Toni> and if it's a stock [17:52] <Toni> that I’m looking at several time frames on [17:52] <Toni> like a swing where I also watch intraday [17:52] <Toni> then I will keep that , mainly if there was something I feel to be of particular importance [17:52] <Toni> this can help [17:52] <Toni> you [17:52] <Toni> in that [17:52] <Toni> say again you are swingtrading [17:53] <Toni> and you are working on developing trailing stops [17:53] <Toni> well.. how can you tell what trailing stops work best under which conditions [17:53] <Toni> unless you have records to examine? [17:53] <Toni> sure.. [17:53] <Toni> with time [17:53] <Toni> you can pick up on this stuff [17:53] <Toni> but it goes so so so so much faster [17:54] <Toni> if you can sit down and spend a few hours on the weekends going back over them [17:54] <Toni> I even recommend [17:54] <Toni> keeping charts of picture perfect setups [17:54] <Toni> to study [17:54] <Toni> things you come across that you missed and it just makes you drool looking at [17:55] <Toni> if you aren't kicking yourself in the head for not seeing it earlier :) [17:55] <Toni> and one thing I like to do also with charts is scroll back.. or cover up part of these picture perfect setups [17:55] <Toni> and bar by bar [17:55] <Toni> slide it over [17:55] <Toni> to see the pattern developing [17:55] <Toni> this [17:55] <Toni> helps to sure the 20/20 hindsight problem [17:55] <Toni> because [17:56] <Toni> it gives you experience [17:56] <Toni> in watching a pattern develop! [17:56] <Toni> alas.. this is all I have planned for today... I hoped you all enjoyed! [17:56] <Toni> what we can do next time that we didn't have time for today [17:57] <Toni> if go through and actually walk through [17:57] <Toni> several setups from the room [17:57] <Toni> that worked as well as those that stopped [17:57] <Toni> and create entries for them [17:57] <primelaw> Yes, I did. Lots of work to do for me in changing what I take down as important notes. Please check the pm. [17:58] <Toni> :) k [18:04] <woodrowkwc> if it's a daytrade, do you print only the intraday chart or the daily also? [18:07] <Toni> well.. for scalps just intraday [18:07] <Toni> for a 15 min setup.. daily as well [18:07] <Toni> because daily resistance and support tend to be more important on that time frame [18:08] <Toni> oh course.. if there is something of note that can affect a scalp or shorter term daytrade then you should at least mention it [18:08] <Toni> like.. 10 day sma is at $ [18:11] <woodrowkwc> makes sense, can do.   |
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