It is probably one of the main tools of every trader
Sooner or later all traders, without exception, come to an understanding that in order to improve the efficiency of exchange trading you need to keep a trader's log. Why is it important? Because it is this tool that turns a beginner into a professional. You probably know the situation when you trade and trade and can't see any results. There can also be profitable transactions from time to time, that may even help you go into black (but more often it's a negative experience), but it is merely the first stage in the development of trading skills. Intuitive game ends the moment you start keeping a trader's log.
Action - Analysis - Correction
There is a certain algorithm, by which, in principle, every sphere of life bdevelopes: you take an action, then analyze it, and then you make corrections. The result is an improvement in this sphere of life, because you will not repeat the action, which gave a negative result for you (or you'll take that action in a different way, taking into account the previously gained undesirable experience).
The same goes for exchange trading!
When you keep the trader's log in a disciplined manner and record all commercial transactions, you have a chance to analyze them and make priceless conclusions about your trading strategy and the tools that work or don't work. In fact, the analysis demonstrates your strengths and weaknesses in figures. What do you do next? Correct further actions considering the statistical information received! Namely, develop strengths and avoid weaknesses.
Let's consider a few examples:
Let's say you have been keeping a trader's log for a couple of months now and noticed that most of your unprofitable transactions take place on Friday. What can you do with this information? As an experiment, try not to trade on this day of the week at all. A month later, according to this correction, it is revealed that trading results have improved by 10%.
Another example, on the basis of statistics filled you saw that if the transaction was closed in first 15 minutes since the trading day started, it yielded a loss with a likelihood of 90%. What's to be done? Make a rule: do not open a transaction in first 15 minutes since the opening of the new trading session.
A month passes, and you understand that this rule has increased your yield by 12%.
Or this example - you have been filling the trader's log for three consecutive months and concluded that the most profitable transactions you made were when trading by figures: Head and shoulders, Triangle and Double top. For the rest of the figures, all in all, you have yielded a loss. This fact gave another opportunity to experiment: you decided to trade only those figures that bring you profit. This does not mean that other figures are always unprofitable. Maybe, you have not fully learned to recognize them correctly and to trade on them. A couple of months have passed, and with the introduction of this rule trading results improved by 19%.
The right conclusions
Without understanding the reasons for profitable trades, strengthening and consistently repeating them will be impossible!
The same goes for unprofitable transactions, without understanding why transactions bring you losses there is no way to eradicate these causes. The more transactions you record in the trader's log, the more you develop like a Pro, the more trading experience you accumulate, and the more accurate statistics you begin to see.
How to fill in the trader's log
Generally, transaction log should contain all the basic information on the transaction. It is important that you understand the reason for which the position was opened, you need to see the conditions that prevailed at that moment, and, of course, the exact parameters of the transaction are important. Items that should be contained in the statistics log for each individual transaction are listed below.
- An overall analysis of the market situation. Development phase of the trading tool: growth, fall or correction phase; which trend prevails; if the graph has an outset, then where exactly the price is - near the top or bottom outline of an outset, etc.
- Transaction information What was the reason for making a transaction? At what price you have opened a position? Where have you set a stop-loss? What is your goal (take-profit)? With what volume have you entered a position? And at what price have you actually closed? Recording this information in the trader's log, it is important to correctly structure it for simplicity of perception.
- Conclusions and thoughts. In this section, you need to write down anything that comes on your mind before, during and after the transaction. For example, what emotional state you've had, what feelings (fear, greed, uncertainty, euphoria, etc.), why these feelings appeared and what do you have to do to avoid them. How to improve your trading results? Where have you violated discipline, or vice versa, have done everything perfectly? Etc.
- And the fourth key element is graphs. You need to make a screenshot of the transaction (before the position was opened and after it was closed), points of entry, exit, all levels, stop and take profit have to be marked on the graph. Visual information will greatly facilitate the transaction analysis.
Which program we use to log transactions
The easiest way to display trading statistics is Excel program. It is by means of this program beginners first try to fill out a trader's log. But how effective is it? The fact is that by filling statistics by means of Excel a beginner, due to lack of experience, spends a huge amount of time just to create this document.
Half gets stuck at this stage and virtually falls out of the race. But those few who remain face new difficulties - which additional options to add to see the full statistical picture (and most importantly, how to construct these tables to extract the necessary information). All-in-all, it is quite hard for a beginner to create a good trader's log on his own. It's much easier to use the ready-made solution.
We suggest to use a specialized program MaxProfit. It is a universal tool consisting of several modules:
- Trading journal - visually it looks a lot like MS Ecxel. In the same way you can add lines and columns, group and filter the data, paint slots and lines, calculate totals, and more. Learn more about the Transaction log by following this link
- Trading statistics - is a powerful tool for deep analysis of the trade. Contains 92 markers, 260 diagrams and graphs + user reports on transaction properties. Learn more about the Transaction log by following this link
- Strategy tester - is a unique tool for manual testing of strategies. Learn more about it by following this link
In the following we'll tell about another important and useful tool - the Trader’s diary
This is a common electronic notebook. In addition to the standard resources for text layout you can add screenshots and links to Transactions and Trades. First things first.
How to add, delete, rename and transfer the pages?
Work with the Trader’s diary starts with adding pages. The figure above shows 2 pages: SP500 and EURUSD. Let's add a new page 'Week plan'. It is assumed that before the start of a new workweek we will analyze various tools and make notes for the upcoming week.
To add a new page click the right mouse button in the pages area and select "Add" item from the context menu
Type a new page name and click 'Save and close' button
After that the form will look like as follow
Time to add new sections
To add a new section click the right mouse button in the left area and select "Add" item from the context menu
Type a new section name and click 'Enter'
As you can see working with a diary is very easy and simple.