Tracking The Quality of Our Trades

BarroMetrics Views: Tracking The Quality of Our Trades

In the comments section today, D asked how do I track the quality of my trades.

My answer…

I keep two types of journals:

  • a qualitative journal – my ‘psyche’ journal. This journal has 3 aims:
  1. to identify patterns of success and failure in my qualitative environment. For example, if I have 10 consecutive winning trades, do my processes change? Do I stop doing what has brought me success? If so what will I do differently next time. I seek to record any changes or significant events in my psychological environment just before and during a trade.
  2. a safe place where I can vent – a place where I can pour out my frustrations, anxieties, and fears on the one hand; and on the other, the successes, elation and rewards.
  • a quantitative journal where I keep the stats I use to assess my trading. Over various time frames I keep:
  1. Ave$ win
  2. Ave$ loss
  3. Win Rate
  4. Loss Rate
  5. Date, day and timeĀ  of trade
  6. Consecutive wins
  7. Consecutive losses
  8. Rating for trade where 3 points means I enter and exit in line with my rules; 1 point means I enter OR exit in line with my rules; 0 points means my entry and exit were not in line with my rules OR I failed to make a trade my rules said I should. My aim is to achieve 90% of the possible points in any month.

The ratings are a rich source of information. For example if I scored less than 90% and had the best ever dollar result, I would want to know how I did this. Questions to consider:

a) Has my intuition found a new pattern?

b) If I had followed my rules, would my result have been better or worse? etc.

Trust that answers the question.

5 thoughts on “Tracking The Quality of Our Trades”

  1. Thank you Ray for the detailed information on how you journal your trading. I added this post to my folder of favorite articles as I believe that its extremely useful and precise.

  2. I agree and think a quantitative journal is a crucial piece in trading success. Especially over the long run when markets go through change phases.

    I keep the stats you mentioned plus also:

    Overall market direction for the day
    MAE / MFE for the trade
    Amount gained/lost vs. amount risked
    and of course a bunch of other stats like performance by time of day, total equity curve, different levels of targets, drawdowns etc.

    I use for all of these. It can be an eye opener for analyzing performance and what kind of trades exhibit higher expectancy and profits and which are costing more than they make.

  3. Ray,
    Thank you. Your insights on journals are quite helpful and address a gap I am trying to close.

    My quant journal show current performance and past periods that has jump/setback and chart diary show how I analyzed/responded to market. These two were quite helpful in other ways but didn’t help me in figuring one key aspect (WHY part) i.e., why jump/setback in performance during those particular period(s)? What was going on in me and how did I arrive at those activities to improve/sabotage my game. If I know then I can do/not do those in future.

    I knew self awareness was the key but challenge for me was figuring what to focus (and record) to build that awareness.

    Your insights provide me with multiple pointers that I can use as a base to craft my quality journal. Similarly the rating concept and questions to ponder gave me new ideas for my quant journal.

    Thanks again,

  4. Hi D

    Thank you for the comment. Glad I was able to provide some guides.

    BTW, I received both the first comment and the re-try. The reason you did not immediately see your post….

    …..The comments need my approval and if they come after 9:00 PM HK time, it usually means they get approved the next day.

    Sorry for the delay and

    Every success with your trading.

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