I’m sure you’ve heard me say, that if you want to become a consistently profitable, professional trader, you must keep a journal. Well, I’m going to make it easy for you by telling you exactly what should be in your journal and how you should use it every day, and evaluate it every week.
What your journal should contain…
What your journal might look like…
Process for keeping this journal:
- Set aside time: Set aside a specific time each day, such as the end of the trading day, to update your journal.
- Review your trades: Review your trades for the day and fill out the template with the relevant information.
- Reflect on your performance: Reflect on your performance and take note of any patterns or trends that emerge.
- Make adjustments: Based on your progress and what you’ve learned, make adjustments to your trading process and plan accordingly.
- Review regularly: Review your journal regularly, such as once a week, to reflect on your progress and make any necessary adjustments.
Remember that journaling is a powerful tool for self-reflection and learning; keeping the journal requires you to be consistent and honest with yourself. It’s also critical to go over your journal on a regular basis and make any necessary changes to your plan as you go.
Process for your daily trading…
- Monitor market conditions: Keep an eye on the market conditions just before and after the market opens, such as the market’s direction, volatility, and any news or events that may impact the market.
- Identify the entry point: Identify the point at which you will enter the trade. This should be based on your trading plan and take into account the market conditions and your risk management strategy.
- Place the order: Once you’ve identified the entry point, place the order for the SPX OTM Butterfly. Try to get as close to a 1 to 9 risk to reward as you can. Easy way is to make the debit 1/10 the price of the spread.
- Manage the trade: Manage the trade in three separate periods, morning from 9:30 to 12 PM, then early afternoon from 12 noon to 2:30 pm, and then late afternoon from 2:30 pm to 4 pm, which is the close of the market. Follow your plan for exiting the trade based on the market conditions structure and your profit management strategy.
- Evaluate the trade: Once the trade is closed, evaluate the trade based on your plan and the market conditions. Reflect on what you did well and what you can improve for the next trade. Enter these thoughts in your journal.
Process for evaluating your trades at the end of the week:
- Review your trades: Review all the trades you took during the week using the trade log and journal you’ve been keeping. Pay attention to the trade type, entry, exit, result, market conditions, entry quality, mental state, and any other data points you’ve been tracking.
- Accumulate trade log statistics: Create a summary of the statistics for your trades, such as the total number of trades, the total profit or loss, the win-loss ratio, and the average profit or loss per trade.
- Reflect on your performance: Reflect on your performance for the week, and take note of any patterns or trends that emerge. Consider factors such as market conditions, entry quality, and mental state and how they may have impacted your performance.
- Assemble best examples: Identify the best examples of trades from the week, those that performed well and followed your plan and those that didn’t.
- Create a template (Your Playbook): Create a template for the best examples of trades that includes the trade type, entry, exit, result, market conditions, entry quality, and mental state, as well as any other relevant information.
- Organize the Playbook: Organize the playbook by the grades given to each trade from the journal. For example, you can create a section for “A” grade trades, a section for “B” grade trades, and an area for “C” grade trades. This will allow you to quickly reference the best examples of trades and see how they performed about the grades given in the journal.
- Update the Playbook: Make sure to update the playbook with new examples of trades at the end of each week. This will allow you to build a library of the best trades over time and to refer back to them as you continue to improve your trading process and performance.
- Reflect on the Playbook: Reflect on the Playbook and analyze its trades to understand what made them successful and how you can replicate them in the future.
- Incorporate the lessons: Incorporate the lessons learned from the best trades into your trading process and plan to improve your performance in the future.
It’s important to review your trades regularly and to be consistent in your efforts to evaluate your performance and improve your trading process. A well-organized playbook can help you to reference the best examples of trades quickly and to learn from your past performance.