Some random thoughts:
When you only get into trades once a month as I do, it's good to remember that trading skill, like many other skills is perishable, i.e. it atrophies over time.
If you have a recipe that works, write it down and follow it each time you make a trade. I'm a private pilot and no matter how many times I fly, I still take out the checklist and follow it. My life and the life of my passengers may depend on it. Why should I treat my financial life less seriously?
I'm also an engineer and can't help tinkering. Modifying my recipe means that I do some backtesting (think engineering computer simulations). Then I do some paper trading (think building a prototype) Only then do I modify my recipe or introduce a new recipe for a different strategy.
I started my career at a Research Center. There I learned to keep a journal. Just the act of writing down your decision process, even when following and established recipe, forces you to confront your proposed decision. This means journalizing your entry, your in-trade management decisions, and your exit. I review my journal daily, because every day I'm in a trade, I must make a decision. Even if that decision is only to do nothing.
It's not as complicated as it sounds to keep my journal. I have an Excel spreadsheet that shows my current positions, their performance and market parameters required for my decision-making process. All the data comes from a direct connection to my TOS desktop platform. I add some calculations to provide some additional decision support. I add a comments column where I enter my currant decision and sometimes reference a rule in my recipe. The four to eight positions I'm in every day takes only two to five minutes to review, add, delete or change the comment field and save a copy for a review whenever I exit a trade.
This is a picture of my IC Journal shortly after market close last Friday.
When you only get into trades once a month as I do, it's good to remember that trading skill, like many other skills is perishable, i.e. it atrophies over time.
If you have a recipe that works, write it down and follow it each time you make a trade. I'm a private pilot and no matter how many times I fly, I still take out the checklist and follow it. My life and the life of my passengers may depend on it. Why should I treat my financial life less seriously?
I'm also an engineer and can't help tinkering. Modifying my recipe means that I do some backtesting (think engineering computer simulations). Then I do some paper trading (think building a prototype) Only then do I modify my recipe or introduce a new recipe for a different strategy.
I started my career at a Research Center. There I learned to keep a journal. Just the act of writing down your decision process, even when following and established recipe, forces you to confront your proposed decision. This means journalizing your entry, your in-trade management decisions, and your exit. I review my journal daily, because every day I'm in a trade, I must make a decision. Even if that decision is only to do nothing.
It's not as complicated as it sounds to keep my journal. I have an Excel spreadsheet that shows my current positions, their performance and market parameters required for my decision-making process. All the data comes from a direct connection to my TOS desktop platform. I add some calculations to provide some additional decision support. I add a comments column where I enter my currant decision and sometimes reference a rule in my recipe. The four to eight positions I'm in every day takes only two to five minutes to review, add, delete or change the comment field and save a copy for a review whenever I exit a trade.
This is a picture of my IC Journal shortly after market close last Friday.
