Overview
The primary goal of review and journaling is to maintain a clear understanding of how your execution is doing compared to what your expected returns are based on your strategy. We also give our self opportunities to review each individual trade or a series of trades to help find areas for improvement. In the journaling process we are taking time to write down specific areas / spots that we saw throughout the day and want to revisit or important notes from a particular session or week. This helps us gain further insight as we review our journals over time to pickup on new insight or help keep us in alignment with our strategy.
Trade Review
For an overall view of how we are performing as a trader we are using monthly data for trade analysis and statistics. Each week we upload our trade activity logs into our favorite analysis platform so we don’t get behind and each month we spend 20-30 minutes reviewing the data output.
Key Considerations:
- Net cumulative PnL
- This is the most important number as it tells us how much net profit we made for the month.
- Average Winning Trade vs Average Losing Trade
- This tells us how much our R:R is actually performing.
- Profit Factor
- Net wins ratio of net loses
- Number of Winning Trades
- Also known as Win Rate, our win rate needs to be in alignment with our R:R performance, a higher WR can allow for lower R:R and a lower WR requires a higher R:R.
- Average hold time (duration) by PnL
- This tells us how we are doing vs how long we are holding trades for. Insight from this could be that if you have a much higher PnL after 5 minutes you could aim to hold core positions for longer.
- Performance by Time of Day
- This breaks down the hour by hour trading session so we can identify times of day where it does not make sense for us to trade or identify times of day were we need to adjust our strategy to account for time of day (such as being more selective during middle of day trading).
Execution Review
In overall trade review we are viewing our trading from a macro level to identify larger trends, look for areas of improvement, make decisions about the most important times of day to engage and other factors about our overall trading. In the execution review process which occurs at least twice a week, we review an entire sessions trades and look at each fill.
In the execution fills we are looking to analyze and (if working in a group setting) give feedback on each others executions. What did we do well? What could we have done better? What major mistakes were made? These are the 3 primary questions we aim to answer but it is within this process that can spark further dialogue about how we are executing vs how we aim to be executing and make adjustments based on those conversations.
Example: You may observe that you are executing at the right areas but you are being overly anxious about taking profit and you see that you have taken all or most of your position off with small profits and by the time the larger move happens, you are left with only a few positions left. As you see these happen over and over you can more confidently make adjustment by holding more of your position for more of the trades expectancy and also gain more confidence in your ability.
Without going through process of reviewing your fills at least twice a week you would not be able to gain this critical understanding such as the example above. It is just as important, that we review our trading at the micro level as we can gain better understanding of what is driving our macro stats.
Journaling
Trade journaling is an important process in everyone’s trading game. Our goal is to make note of important events such as specific things we saw during the session to review later in replay. Or specific trades that we took , errors made , great trades taken , mental mistakes etc.
There are many different ways to journal and there’s not one right or wrong way to do it. Some like a structured document that they fill out each day, others prefer an open notepad that can just have notes / insights written on it. However, it is important to journal and make note of your trading day/week so that you can get ahead of repeating negative patterns or work even more on strengths. It’s difficult without the day to day journaling process to pick up on these insights over time. I know just as many successful traders who only write down the most important inflection points as I do successful traders who fill out a complete worksheet everyday. What is most important is that we chose what we will stick to everyday and matches our personality vs some insanely rigid process that we are unlikely to follow through with it.
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