Traders often ask us to review their trades in order to assess how well they are doing in the Blue Point Trading Trader Trainee Programme. This assessment is based on a review of the trade journal.
The first step is to complete a trade plan (more on this in other blog posts, but do check out the blog links below to past articles). By reading the trade plan and the trade journal in tandem with each other we can compare what you planned to do with what you have actually done. To assist you in trade plan performance, we need to understand whether your problems or issues lie in the trade plan (trade strategy) itself or whether they lie in the execution of the trade plan. This is the whole point of a trade journal.
Keep in mind that trade execution, based on past results we have observed, is 80% of a trader’s challenge. Anyone can learn the theory in a book but applying that theory is an entirely different matter. The same principle applies to sports. A coach or player can learn the movements in a book but going out on the playing field and executing those movements successfully is the most challenging part. Trading is no different. So whether you are in the Blue Point Trading Trader Trainee Programme or not, we hope you find this useful.
In this Trader Tip we demonstrate a standard method of marking up a chart for your trade journal. The goal here is to mark up your trade journal promptly during the course of the trading day, even if you are under pressure. If you adopt a disciplined approach to this activity, you’ll make the review process much easier for yourself and for Blue Point Trading. What’s more, performing this one little extra task during the trading day might slow you down for a minute or two and prevent you from over-trading.
Here is our standard, four-line trade journal chart mark-up method:
- Trigger – the trigger line (in black). You may want to use grey to indicate other lines that support the rationale of the trade plan.
- Stop – the stop line (in red). This will clearly show the direction of the trade, saving you the effort to dig into the trading files to figure it out.
- Target – the target line (in green). Also indicate secondary exits on multiple order trades.
- Results – the results line (in blue). The start of the line is placed on the x, y coordinates of the time and price for the entry, along with this same idea for the exit.
If the chart is properly marked up, you can easily scan the trade journal to gain a better understanding of trade execution issues at play. Follow these simple steps when marking up charts for your trade journal and hopefully you will glean enough from your trade journal to improve your trading. Of course, at the end of the day those who work smarter, not necessarily harder, will be the winners (though effort is always required in trading).
Click here, or watch this Trader Tip below.
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