The biggest challenge that I am facing as a trader is is to structure a daily routine that aims at creating order in an unstable environment. The only way to do this is to create and follow a detailed trading plan and to keep a diary of every trades in order to learn from them. There are no shortcuts on the way to trading expertise and only a structured, deliberate learning/monitoring process can allow me to avoid chaos !!
One of the key element is to continually monitor my performance over a meaningful number of trades. Grading every 25 trades should help me identify if there are some particular systematic weaknesses that are apparent in my trading. In order to do this, I am computing a number of statistics that should hopefully help me identifying recurrent themes:
Percentage of winning trades
Biggest win/biggest loss
3 biggest wins/3 biggest losses
Once this quantitative evaluation has been completed, I am reviewing each and every 25 trades from my diary with the objective of identifying recurrent patterns both in my strategy and the execution of the plan. This qualitative analysis should help me to continually look for improvements in my strategy and identify early enough if I need to adapt to changing market conditions. It is, as well, the way to adress recurrent problems regarding the execution of the trading plan and psychological issues that may have occured during the period.
With this diagnosis in hand, my aim is to objectively look at the quality of my work and to identify what has to be improved to continue growing as a trader!!
Comments : The trading performance of the first 25 trades of the year has been good. I achieved a grade of 1,27 which is o,12 above my trading objective of 1,15. This mark takes into account the key statistics of a trading system (% Wins, Average Win/Average Loss, Maximum Win/Maximum Loss and 3 Biggest Wins/3 Biggest Losses).
Looking back in detail, I realize that my initial stops were generally slightly too conservative. I will work on having my stops closer to my entry without affecting my hit rate (hopefully...). The other issue has been too little occurences. This was due to a very busy schedule with the creation of the ATS program and related business issues... I should be able to trade more from mid may 2007 onwards and improve this aspect... Let's see !!!