In this post I’m quoting from The New Market Wizards, a book written by Jack D. Schwager. I do this to highlight the importance of journaling your trades. Sounds good? Please read on.
About the Book:
The New Market Wizards is a collection of interviews with extremely successful traders. It aims to reveal the common traits, strategies, and psychological disciplines that contribute to their extraordinary performance. This book is the second installment in the “Market Wizards” series and was released in 1992.
What I like about this book (and the others in the series) is this: the traders in the book come from all walks of life, trade different instruments / assets, and use different strategies. Yet, they all are successful. Why? What do they have in common? The common theme is their practice of good risk management and their understanding of the psychological aspects of trading; things all of us can aspire to implement.
The Quote and a Short Explanation:
The following quote is from a trader interviewed in the book by the name of Randy McKay. He was pretty much successful in trading from the start and was asked what he thought contributed to this. His answer was:
One of the things I did that worked in those early years was analyzing every single trade I made. Every day, I made copies of my cards and reviewed them at home. Every trader is going to have tons of winners and losers. You need to determine why the winners are winners and the losers are losers. Once you can figure that out, you can become more selective in your trading and avoid those trades that are more likely to be losers.
Remember: In the beginning you will most likely suck at trading. There are some anomalies like Randy, but they are rare. How do you get better? By journaling an reviewing your trades:
- You will learn what works for you and what doesn’t.
- You will improve if you do more of what works and doesn’t
- You will be able to identify mistakes and correct them.
- You will improve when you start reducing your mistakes.
- You will get actual proof of your progress.
- You will learn when and under what conditions your strategy performs at its best and worst.
- Your performance will improve in a big way if you don’t trade during market conditions that doesn’t suit your strategy.
Get in the habit of journaling right from the start. You don’t get better at trading by just “trading”. You get better by tracking your trades. If you don’t track your trades, how will you know what you need to work on?
Finally:
Keeping a trading journal is not what is considered the “sexy” part of trading, and most of us don’t want / like to do it. But what sets the successful traders apart from the not so successful traders? It is doing the work that most traders don’t want to do – journaling.
Thanks so much for reading. I hope your trading goes from strength to strength.
Thanks and Regards,
Trading SOS SOS
