Journaling

BarroMetrics Views: Journaling

Baz was kind enough to provide a link to a free video utility, ‘Loom‘. Baz’s suggestion is it would be a useful tool for journaling. My view, it should be, but most retail traders wouldn’t use it. I think for three reasons:

  1. Journaling that acts as a learning tool is usually time-consuming, especially if the initial recording media is a video.
  2. Even if kept, most retail traders, don’t revisit to extract the info needed to improve.
  3. Even if they revisit and extract, often they don’t know what to extract.

The main function of keeping a psych and an equity journal: to have a database from which to extract lessons for future improvement. In a word, by keeping the journals, we know what to avoid and what to keep doing. In this way, we raise our skill level from ‘competent’ to ‘mastery’.

There are two steps in the process. First we ‘enter’ the data, second, we extract the lessons.

The ‘entry’ can take any form. We can write and take snapshots; we can video and extract the info, or we can use a combination of the two. What is important is we have the info, firstly to identify the qualitative factors (psych entries) that hinder our success and those that assist it; and secondly, to identify the objective factors (equity entries) that do the same thing.

With psych entries, we are looking at items such as the conditions under which we are likely to be disciplined and the conditions under which we won’t be e.g. following consecutive wins or losses.

With equity entries, we are looking for stats: Maximum Adverse Excursion, Average $ Win and Average $ Loss, Win and Loss Rate, etc.

Once have the info, you need to learn from the entries. For example, what has been the effect on my equity curve of ill-disciplined trading? It’s best that this info is displayed visually. Research shows visual lessons from trading journals have the best impact.

One of the main reasons I recommend Edgewonk┬áis because it does all this seamlessly and mainly automatically. For a one-time payment of USD 169.00, it’s one of the best value tools around.

 

2 thoughts on “Journaling”

  1. Hi Ray,
    “With equity entries, we are looking for stats: Maximum Adverse Excursion, Average $ Win and Average $ Loss, Win and Loss Rate, etc.”
    What minimum stats does one need to maintain. pls can you elaborate

    Regards.
    Manish

    1. Hi Mannish

      That’s a difficult question to answer because it really depends on what a trader needs. For me, the min stats:

      * avg$ win (avg % capital win)
      * avg $ loss (avg % capital loss)
      * win/loss rate
      * consecutive wins and losses and frequency of occurrence
      * max drawdown ($ and %)
      * Avg drawdown ($ and %)
      * Maximum Adverse Excursion ($ and %)
      * Maximum Facourable Excursion ($ and %)

Leave a Reply

Your email address will not be published. Required fields are marked *