Matthew Kerkhoff, options expert and editor of Dow Theory Letters, continues his 14-part educational...
Trading Lessons I Learned the Hard Way, Part 15
08/21/2012 9:00 am EST
Ron Wagner of Revolutionary Trading discusses the lessons he learned from his early days of trading, and how his trading has evolved to become profitable.
I have talked about a great many elements that have helped me improve my results, but none turned out to be more valuable and helpful than tracking my trades. In fact, I would have to say that if it were not for the statistical analysis that I did on my own trades, I would not be typing about this right now.
It’s one thing to learn all the technical patterns and how to apply them in different market environments, but I didn’t know what I was doing really well—or really badly. At first, I just kept track of my results on yellow tablets, but soon enough I was using a simple Excel spreadsheet that I created. I didn’t do anything very elaborately when I first started tracking my results, as I was most interested in which pattern I had the best results with and at what time of the trading day.
During this process I learned a lot about myself as a trader. I learned how much time I needed to interpret the market direction and how many candles I needed to see for my patterns to set up.
I created a set of binders to keep my printed trade charts in, and I categorized my trades for easy reference. I dedicated myself to eliminating one bad habit or series of occurrences at a time, until I became extremely consistent. I found, like anything else worthwhile in life, trading required a routine and an ability to track results.
I found that my first approach to becoming a great trader in a rush didn’t work. I realized, after losing a bunch of money to the market, that I had to break it down and tackle one element of the equation at a time. It was not until I did this that I became consistent in my winning trades.
After I figured out how important it was to track my trades, the first thing I did was to construct a print page. My print page was much smaller than my trading page and I could fit multiple time frames on a single sheet of paper. At the end of each day, I would print out the trades I took, along with a copy of what the market had done. This way I could compare my trades against what the market had done.
I would circle my entries and exits and write notes on each page to serve as part of my journaling process. I still have, to this day, thousands of my printed trades in the basement. I spent a lot of time looking over my trades and could go back to them to backtest different strategies from my own records.
Over a relatively short period of time, I was able to really adjust the types of trades I took, and at what times during the day I took them. I never realized how important this was until I saw my results improving each time I studied my trades. I focused on improving something each week. Not a week would go by without me having some area of my trading to focus on.
I would usually review my trades either on Friday evening or Saturday. This way, I could take one full day away from charts so I was fresh and focused for trading on Mondays.
I have fond memories of spending hours of time finding ways to improve my trading, which really helped me become a much better and consistent trader.
- Construct a print page and print out each of your trades every day!
- Circle your entries and exits on each trade you print out!
- Categorize your trades by pattern, things you have done wrong, winners, and losers!
- Study your trades each week and compare them against what the market had done!
- Make small adjustments each week and only focus on one element at a time to improve on or if a bad habit to eliminate it.
Next, I will talk about a couple of adjustments I learned that were needed from my tracking that made a big difference in my results.
Ron Wagner can be found at Revolutionary Trading.
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