This week Dominic Picarda looks at keeping track of your trading.
Do you know the vital statistics of your trading? You may think the only thing you need to watch is the bottom line - how much profit or loss you are making.
But if you really want to monitor and improve your performance over time, you need to do a bit more than just that.
Before placing each trade, you should make a brief note of what you're doing and why. And once completed, you should record how the trade went and how you might improve it next time.
Keeping a record
Jotting down what you're planning to trade is a good way of holding yourself to account. If you have to jot down your logic, you're more likely to stop yourself from trading on impulse and it makes things much easier when you return to analyse your performance in the future. While the reasons why you entered a particular position may seem crystal-clear now, you may struggle to recall them twenty trades down the line.
The best approach is to fill out a standardized form before placing each trade. This should ensure you record all the key bits of information: where you'd enter, what your targets are and where to put stop-loss orders.
As well as prices, think about how much time you intend to run the position for. Write down the key support and resistance levels and why they matter. Attach a quick screen-grab of the chart you're trading for future reference. After you close your position, write a line or two about how it went and what you'd do differently next time.
An easy way to track your performance in detail is to download your account history from Tradefair as a spreadsheet. With a couple of clicks, you can then answer some of the key questions you should be asking.
For example, how many of your positions are winners compared to losers? How long are you running each position for? How does your achieved reward-to-risk ratio compare to your expected reward-to-risk ratio?
Until next week, happy trading
The Tradefair Spreads Team
The above comments do not constitute investment advice and neither Tradefair Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
Risk Warning:
Spread bets carry a high level of risk so you should only speculate with money you can afford to lose. You can lose more than your initial deposit and stake. Before you open an account, please ensure that spread betting matches your investment objectives, familiarise yourself with the risks involved and if necessary seek independent advice.
Article provided / approved by Tradefair Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
Tradefair® is part of the Betfair Group.
'Keeping Track of Your Trading' edited by DB, updated 06-Nov-09
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Risk Warning:
Please note that spread betting and CFD trading carry a high level of risk to your capital. You can lose more than your initial deposit. These products may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
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