Journaling- Let the Data be your guide
If you want to push your trading/investing to the next level and perform consistently and profitability,
documenting what works and what does not is paramount to your success. It is nearly impossible to trade
one strategy perfectly without backtesting, journaling results and analyzing your data.
What is included in your Journal? The journal is the list of all the reasons why you got into the trade, was
it a particular ticker, the direction, order execution., score, trend, duration, time frames. Additionally,
include all of the reasons for exiting (R/R Ratio, Stopped Out, outside circumstances) and anything you
would do differently. List out all external factors that may have impacted your trade, news that may have
shook your trade out, this will teach you to follow the economic calendar closer. Learn a lesson from each
trade, do not waste your time trading if you are not documenting. Do not string trades together without
learning a lesson in between each trade. Trade for the discipline not the money. Follow your plan for at
least 20-30 transactions before amending strategy. Let the data tell you what is working and what is not.
Multiple transactions allow you to reach your goals. Passion needs to be diverted to the next trade.
Statistics to Keep on Hand
● Batting average per Tickers/Assets: Keep note of what tickers are working for you and those who
are not. Take out tickers from your basket that you have not had success with
● Yield per Ticker: If your yield is higher with one ticker than other but your batting average is
lower, keep it in your bucket as you can squeeze more yield on these with a lower entry amount.
● Batting average per length of hold (Trade Duration): Do you trade better when day trading? What
kind of swing durations work best for you?
● You may not be a Day-Trader! Based on your Trade Duration statistics you may be a significantly
better swing trader vs a day trader.
● Yield per length of hold (How long you’re in a trade)
R/R Multiples: The trader must understand and follow through on R/R multiples. R/R multiples are
simply the amount of return per unit of risk and can vary from 1 unit of risk to 1 unit of return to 1 unit of
risk to infinite unit of return. Understand in your trade journal what your R/R Batting Average is, do you
perform significantly better with 1:1 R/R trades than you do on riskier trades? Adjust your target to
maintain consistent profitability, do not always shoot for 3:1 R/R if your battering average is 0, be ok with
taking 2:1 R/R consistently.
Proper Timeframes: What’s more likely to hold, a bigger time frame or very short time frame? Banks and
Institutions trade in areas of longer time frames. Take a support level on the longer time frame as those
levels tend to hold significantly stronger. Larger time-frames can often lead to a better batting average.
Stops: Wide vs. Tight stop losses. Would the trade have worked with a larger stop? Are your stops too
tight? Make sure to document what is working and what is not.
Ticker Selection: Mastery of Few- Jumping around does not lead to consistent trading in thousands of
different stocks. Create a basket of familiar stocks and vigilantly track your performance in those tickers.
Remove stocks where your batting average or yield is significantly lower than others and begin cycling in
new stocks as you learn more and document further.
Zone Refinement: Consider Drawing levels on two different time frames. If your zone gets tighter you
can reduce your risk and by setting stronger levels your batting average can rise drastically.
Position Sizing: Bigger moves occur less frequently. Consider position sizing instead of a bigger target.
Target: Are your targets too greedy? Are your targets often too optimistic? Bigger moves occur less
frequently so do not rely on them for your target. Start yourself off with one profitable week, then do
another. If you can successfully do this, consider raising your contract size by 1 as long as you can
maintain consistency. Slowly creep up position sizing instead of drastically jumping contract sizes in
order to maintain psychology.
Formulas to Know