Nov
04
2009

  I Started A Trading Journal

I read Minyanville's "Buzz & Banter" every morning while I trade, and catch up on the day's posts during William's nap in the afternoon. One of the columnists answered a question about whether keeping a trading journal was a good idea, and she convinced me. I added a few columns to her example, these are mine:

Date Bought
# of Shares
Stock Symbol
Purchase Price
Basis
Date Sold
Sale Price
Net Proceeds
Profit/Loss
Reason
Term
Gross Return

One of the main reasons to keep a journal is because it's human nature to repeat your mistakes. People forget, and fall into patterns. Keeping a journal will help a trader recognize and avoid losing habits, and conversely, recognize and focus on the strategies that work for them.

I filled in the data for all my trades so far in 2009, but I see the woman's point because I forgot the reason for a lot of them. I'm sure it made sense at the time. . .

So I'm filling in the reasons as I go along now. I'm also noting what I expect to make on a trade (target sell price) to see how many times the price actually hits my target to see if I'm analyzing my charts correctly.

For example, with the FXP I sold yesterday, I bought because the chart recorded a "buy setup" and I got in at $8.12. My target price was $9.53, which was the level at the first day of the sell setup. However, I sold as soon as I knew the "sell setup" would not complete, which was yesterday at the close. I got out at $8.74. This was a good call, since it opened this morning at $8.28. If I had waited until after the actual close (instead of 5 minutes before the close) I would have lost $.46 per share. Which is a big deal for the size of this position. So while I did not hit my target (fail), I did analyze the chart correctly in advance of a major price decline, and locked in a decent profit (success). And now that this is recorded in my journal, hopefully I will remember how important it is to get back to trading during the last half hour if there is any chance my patterns will fail that day so I can get out before the collapse. If I let Terry know in the morning, he can usually accommodate me.