A trading journal is one of the biggest things new traders and even veteran traders overlook. Yet it is the key inside your own mind. There are 3 key times to reflect on a trade:
Before Trade (BT)
Current Trade (CT)
After Trade (AT)
BT - Is your game plan, what you expect, etc, this is usually the same for us each time so we can summarize in 1 to 2 sentences, my entry is $100, my stop is $99, and my target is $105 for 5:1 risk reward.
CT - Sold some at $103, moved my stop up to $102, still aiming for $105.
AT - I am an idiot, stock is at $110 in a straight line up, had I just stuck to my gameplan I would have greatly exceeded my target. Lessons learned, more patience, focus more on upping my stop loss and less on offering out.
Now over time, as your trading journal grows you can look back and see how you traded a particular name, you can look back and see how you fucked each trade up and what you did well. When Shake and myself were prop traders we had to do this every single day and send it to our boss before we were allowed to leave. At first we fucking hated it, it was such a useless task, we knew what we did that day, because we were the ones clicking the damn buttons. However eventually it became something we enjoyed and eventually something that we wanted to do. Something that helped us rid ourselves of the shitty feelings of a trade we really fucked up or the joy of a trade we really murdered. Even for my trading now, I look forward more to writing what % I locked in on my index cards from the PnL from the trade. I am playing a game with myself to put on the best possible trades and avoid all the shit.
Below we will go through my BT, CT, AT of a recent trade in HD, you will see it's not a 9 page story, just short and sweet.
BT - For all 3 trades my GP was the same, buying $180.05, stop $175.89, $4 risk per share, 2% risk in the trade. Goal was for a move to $200 for a $20 a share gain or 10% return (5-1). Now this is a bear flag, however there are times when the bear flag holds and it actually becomes a base where you can get great stock. Clearly this time I was wrong.
CT - 1st trade, nice day 1 pop, stop upped to current LOD, next day opened at the prior pivot on no volume, realizing I was too optimistic upped stop to below $182 figure, got stopped out for a small profit, few hours later right back to my price. Too early.
Trade two, $176 still held will try trade again same game plan as before, ticked $180 however quickly came back, not a good sign, LOD stop, stopped out next day for 1% loss. Water off a duck's back. $176 held again.
Trade three, need to be consistent and try it again, same thing ticks $180 no buyers, giving the stop vs the real out, stopped out for 2% loss. Broke support, bear flag breakdown in progress, move on.
AF - made a little, lost a little, was consistent, chart wise not A+, kept the losses small and did not change the plan in a way that did not benefit the trade. Will buy $180 back in time, mental capital at 100. One takeaway was that $180 was not able to break the 2nd or 3rd time could have kept the 3rd trade tighter that would have saved 1%. Next time buying base breakouts and when the level comes right back, be quicker getting out.
No crazy story about what Home Depot was doing as a business or who was tweeting about it, or the P/E ratio. All that matters is how I felt it was going to trade, how I traded it, and how I can improve next time. Looking at the chart now, seems we will see $150 in HD well before that $180 breakout will be on the cards. 3,000 other stocks out there could care less, onto the next one.
“The more you can speak the truth, the more liberated you will become.”
For each of your trades, get in the habit of doing this, post the chart and a brief summary so you can see how on or off you are. Sure you can lie to me or to your friend however you have nothing to gain from lying to yourself.
Do you have balls?
In the Group Chat, post an honest analysis of one of your recent trades of your BT, CT and AT. If you are not trading live yet (which is a good thing), you can do it on a demo trade, or even on a stock you have been watching.