‘Order’ and ‘Entry’ Spreadsheets
For Day Traders.
Your 1st question should always be WHY!
Why use a ‘Trading Order Spreadsheet?’
Asking why begins your mental journey; a cognitive narrative that eventually leads to render and manifest your unique version of HOW!
So let’s begin with the WHY. Why use an ‘Order and Entry’ spreadsheet? Then we’ll lay down the foundation of HOW!
Why Use A Trading Order Sheet?
If you are just starting out as a day trader or are receiving mixed trading results, your objective can be broken down into a simple statement;
‘Just Keep Moving Forward!’
You seek consistent progression in your trading whilst always protecting your downside; meaning correctly manage your risk! Professional traders seek to trade consistently within their upper peak performance levels, (a FLOW state). This can only be maintained and developed impart by regular trade analysis that’s structured within THEIR predetermined PROCESS designed for positive PnL over time.
FOCUSING ON PROCESS IS KEY TO ACHIEVING POSITIVE RESULTS IN ANY PERFORMANCE ARENA!
You need some form of yardstick marker, a way to measure. A trading order and entry spreadsheet is one such tool to compliment your arsenal of weapons to help you in your daily battle within the markets and the internal demons that seek to play with your mind!
As Peter F. Drucker famously said;
“What’s Measured Improves.”
What IS A Trading Order Sheet?
A trading order sheet allows you to ‘pen’ moments in time and focus on important trading criterion; IE prices, economic data, technical levels etc. In fact anything you feel that is significant and can impact your trading day that’s anchored into your subconscious my making a ‘Mental’ note can be transformed into a conscious connection via a ‘Physical’ note. This transfer or ‘Shift’ in consciousness cannot be underestimated.
The power of the pen allows one to;
- Take notes for ‘FUTURE’ timed events.
- Take notes In the ‘PRESENT’ moment, (trading in the NOW) events.
- Helps you review these notes; thus NOW becomes ‘PAST’ trading events.
These ‘Trading Triggers’ will help to anchor your associated trading memories, trading emotions and your trading thoughts; a blended ‘Snapshot’ of what you did, felt and didn’t do.
These ‘Snapshots’ also form and draw a higher level depiction of ‘who you were’ in that moment in time. This is extremely important and most traders are completely oblivious to this portrayal; as this representation can be worked on, altered and refined. This tangible visible manifestation of self; emitted by/with the power of the pen!
KNOWING WHO YOU ARE WHILST TRADING IS MORE THAN CRUCIAL TO SUCCESSFUL TRADING!
UNDERSTAND THAT YOUR TRADING SUCCESS HAS NOTHING TO DO WITH TRADING INDICATORS AND EVERYTHING TO DO WITH YOUR STATE OF MIND, WHO YOU ARE; YOUR
‘TRADING DNA STATE’ DURING LIVE TRADING SESSIONS!
So a ‘Day Trading Order Sheet’ is more than just a collection of trading thoughts and numbers. It’s written more as a reference point; a location that holds clues, indications and circumstantial evidence about how YOU ‘perceived’ and interacted with the market in a certain period of time.
It allows you to openly ask questions about;
- What did you do right?
- What needs reinforcing?
- What needs changing?
Remember; DATA IS GOOD! Collecting data is one thing, but knowing;
- What data to collect? What is the ‘RIGHT‘ Data?
(The RIGHT data is defined by you WHY, your purpose for collecting the data in the 1st place)!
- How to interpret data.
(This will involve various BIASES, as ‘SUCCESS IS NOT A GAME OF PERFECT;’ but it’s critical not just to know where to look, but what you’re looking for, which also means you must know what you’re presently looking at!).
- How to act on your findings.
(As decisions made alter results)! This leads to an important question you must ask yourself;
Question; “Given What I Now Know, What Could I Do Differently?”
A real key to self-improvement is in being able to question yourself from various perspectives within the context of your predefined objectives.
‘Ask Better Questions, Get Better Answers!’
The devil is in the detail
I like this phrase, it’s derived from ‘God is in the detail.’ If God is perfection (as he is the supreme creator of all living things), (If this is your belief); then seeking perfection in your trading will come from learning to demystify, decipher and unravel the details within your trades.
Notice the word perfection. By definition this can also be surmised as;
‘free of mistakes!’ You are seeking to trade mistake free, 100% efficiently, meaning trading in line with your objectives, defined by your beliefs within the framework of your process.
This is an important distinction to make, as trading success as stated earlier is not a game of ‘Perfect.’ But trading mistake free, trading perfectly in line with your predefined rules and objectives is attainable!
A ‘Super Trader’ seeks;
‘PERFECTION IN PROCESS!’
By definition; to be able to attain a perfect process you must be able to analyse, clarify and quantify your process, (and previous processes!) You 1st must have details about your trades and trading events! You must have data to work with. Data is good! You need data about your trades to evolve and improve, to have proof that you are trading at an elite level as a Super Trader can and does do consistently.
So; trading order sheets are firstly a Data Collection Tool that help you collate data, YOUR data that will lead you towards self-improvement and growth in all the areas and aspects of trading, (If used correctly)!
Secondly, instilling written notes within order sheets crystallises mental triggers, reminders of things 1 must do at certain times within your trading day. The phrase ‘disciplined trader’ springs to mind!
So what are we really saying here?
Partly; a day trading order sheet helps one focus and narrow one’s attention. With so much noise within the market environment, razor sharp focus and attentional skills can be triggered with the aid and use of day trading order sheets.
A great book on ‘Essentialism’ enters into my mind by Greg McKeown. He goes into great detail in how one can be more effective, create better results by focusing on less and not more. This position needs some careful consideration as it can shift how most traders think and act with regards to what they focus on.
“MAKE THE MAIN THINGS THE ONLY THINGS!”
If you don’t feel like buying the book, then maybe take a short look at a video Interview with Greg McKeown by Stanford Business School. Greg’s findings might manifest an ‘AHA!’ moment and just trigger you into action. Really imagine a process which could ‘Help You Focus On Less But Accomplish More!’
Utilising a trading order sheet can and will lead to an ‘Increased Level of Confidence.’ Confidence, knowing you have made written notes, critical reference points in advance to aid your ability to trade well, and confidence in knowing you’ll have data in which to improve and learn from mistakes.
So by using an ‘Trading Order’ spreadsheet in excel, or manually filling in a printed version that would be sat on your trading desk; (below the battle glow emanating from your multiple trading monitors’ price charts); and being seated in your comfortable Day Trading Chair, you’ll be cultivating an environment that seeks to help reinforce;
- Your predefined objectives. By channelling your attention, you reduce your trading periphery so you can access your pre-desired state of being, your ‘Trading Zone.’ This enriched trading psychological state will set the conditions to enable you to trade in a pure, simple, unclouded and potentially flawless way).
- Your predefined objectives. By channelling your attention, you reduce your trading periphery so you can access your pre-desired state of being, your ‘Trading Zone.’ This enriched trading psychological state will set the conditions to enable you to trade in a pure, simple, unclouded and potentially flawless way).
- Your process. (Setting triggers, having ‘Anchor Points’ that home in on areas that require action / inaction and having the ability to take notes, aids you in continuing your evolution and development in peak performance. Perfection in process can be and IS attainable!).
- Your process. (Setting triggers, having ‘Anchor Points’ that home in on areas that require action / inaction and having the ability to take notes, aids you in continuing your evolution and development in peak performance. Perfection in process can be and IS attainable!).
- Trade efficiency. (If making mistakes can be defined as ‘Not Trading To Your Rules,’ then adopting a daily regime that includes the utilization of a ‘Trading Order Sheet;’ you’ll be more inclined to focus on your rules so as to minimize / eradicate trading errors and thus maximize your trade efficiency).
I need to speak a bit more about OBJECTIVES as this intentional prerequisite is critical to being a successful consistent trader and is sometimes varnished as just another add-on tool that can possibly help improve your performance. Take these next few words and etch them onto your hippocampus…
“Predefined Objectives Are As Important To Your Survival In The Markets As The Air You Breathe Is To Living!” – DowBoy
Being a ‘Day Trader’ means that you are living within a performance / results orientated arena. Having objectives isn’t just important, it’s critical to success in this harsh and unforgiving environment.
“You Are A work In Progress, A Self-Correcting Organism, A Continuous Reinvention Of Self. All Super Traders Have Conscious Awareness To This Fact.” – DowBoy
Super traders don’t trade on hope, they are future oriented, having predefined objectives that state how the future should unfold within their chosen model of reality, and it ISN’T reality, it’s THEIR OWN UNIQUE MODEL OF WHAT REALITY IS. Your objective, your view, depiction and outlooks set in motion your decisions and actions that aren’t random events. These conscious activities are imbedded into your subconscious mind that lead to outcomes that are anything but random events. Your results are self-created. Trading is an internal game! Your results aren’t based on extrinsic events that aren’t within your control. (A catastrophic natural event, such as an earthquake or bomb that immediately impacts market sentiment might be a blip that can impact your results in the short term). No; your results ‘Over Time’ are defined by your trading model that’s been moulded by your chosen rules, the conditions you have put into place and the mind-set that you have cultivated at any moment in time to trade with; in short, the game you have chosen to play.
“You Rewrite The Future!”
Understanding this; that having objectives impacts your trading in such a dramatic way. It’s essential to have objectives; as by having predefined objectives you manifest your future outcomes and trading results!
Objectives are key to trading consistently and profitably over time.
Don’t base your trading on what you ‘hope’ will happen but rather what your theories predict will happen as a result of the different decisions and actions you INTENTIONALLY take.
Having predefined objectives sets your internal compass, the directional course neurologically to win this game, YOUR game, with YOUR rules, setup under YOUR chosen conditions.
Important Point 1:
We All Play Games. Life Is A Game. But Remember To Internalize That;
‘Trading Is YOUR Game!’
You Are The INVENTOR, The REFEREE, THE PLAYER!
You Are In Total Control In How It Is Played And When To Call Time And What The Long Term Result WILL Be!
(and the word WILL is no typo!)
Also note that when outcomes don’t correlate to what you pre-planned and what you think you should be consistently achieving, it’s time to alter your game, write new rules or adjust the conditions of your game; even start a new game!
And if you aren’t following your rules, or worse still, don’t even have rules, then you really shouldn’t be trading as you don’t even have a game in place! If there’s no game, then by definition you can’t win!
“If You Haven’t Designed A Game, Thus You Have No Rules & No Objectives; Then How Can You Expect To Win!
You Can’t Win!
Misery & Financial Ruin Await!” – DowBoy
Important Point 2:
Being the very best version of self is a ‘DELIBERATE’ choice. Getting clear about how you want to ‘FEEL’ in your life and in your trading is the key to everything! it’s more important than just setting goals. You have to have clearly defined this feeling! This effective form of clarity and focus will lead you to sustained happiness and fulfilment within your Trading Life.
I’m serious here, this is no Anthony Robbins motivational snippet to make you feel good about yourself!
I’ll say it again in BOLD letters so you get this also etched onto your hippocampus! ….
Being The Very Best Version Of Self Is A ‘DELIBERATE’ Choice!
“YOU ARE THE CAUSE OF ALL YOUR HAPPINESS
AND ALL SUFFERING IN YOUR LIFE!”
“Don’t Believe Extrinsic Factors Give You Your Results. Winning Is An Intrinsic Game.”
“You’re Not Competing With Others, You Compete Only With Yourself!”
And whilst I’m on the subject of Intrinsic and extrinsic, be aware of these 2 words living as motivators in your trading.
Several studies show that external motivators (IE to make money purely for materialistic gain shouldn’t be your prime motivation, an external reward). This mentality will not get you where you want and need to be. The winning motivator in the long run is always an intrinsic one. It’s doing it purely for the sake of doing it in a non-tangible way; (wanting to be the best YOU can become rather than for materialistic gain). This marries up with the above statement on FEELING. Get clear on what and how you want to ‘FEEL’ in the future; not how many acquisitions one can gain over time is a big key point to internalize.
The above is important to mention as nearly every trader starts wanting to get rich; they initially are doing it for the money.
Please understand this;
“MONEY IS THE BYPRODUCT OF PEAK PERFORMANCE! AND YOUR RESULTS ARE THE RESULT OF YOUR INTRINSIC MOTIVATORS!” – DowBoy
So to summarize all the above in 1 sentence;
“The Things We Don’t See Determine What We Do See!”
So downloading your TRADING THOUGHTS and TRADING OBJECTIVES from your internal mind onto paper (a ‘Trading Order Sheet’) will crystalize your focus and help manifest results into your external perceptual trading realm. It’s that simple.
“Thoughts, Objectives Onto Paper Leads To Directional Action To Obtain Desired Results!”
So enough about understanding some of the theory and the WHY’s, let’s get into these ‘Trading Order Sheets’ and delve into application; the HOW!
How Do I Use A Trading Order Sheet?
Let’s concentrate on 1 sheet within the excel workbook called the ‘Scalper.’
This sheet is specifically designed for Day Traders and 1 that I use on a daily basis.
It’s split into 12 functional key areas which are as follows; (Numbered areas on the image correspond to the numbered list displayed below….How Surprising is that! :-)).
1. Number 1 is ‘Time Data.’: This is used predominantly as Information for filing purposes. You must have a good filing system in place to quickly access past Trading Order Sheets in a linear timeline fashion, so having basic information that relates to;
Date: (Date trades were placed; day/month/year).
Day/No: The Day of the week (i.e. THUR)
and importantly your ‘Trading Day Number.’
What is a ‘Trading Day Number I hear you ask?’
This is an interesting one. I don’t use a regular ‘Gregorian’ yearly calendar approach, in which my trading year must consist of 365 days, (although I do try to do this it’s not compulsory; I don’t force my trading). A ‘FULL’ trading year will always start on Jan 1st (If that falls on a weekday) but importantly can finish before the 31st December within the same year).
I split my year into a ‘Trading Year’ that consists of 240 trading days, so that’s 20 trading days per trading month. So if you take 365 days minus 240 that leaves you with 125 days away from your trading screens. Now these trading days don’t either have to be consecutive trading days, i.e. you don’t HAVE to trade 5 days (Mon-Fri) in each week, (You can miss days!) and there are many reasons for this.
Examples being; you may feel sick (i.e. a Migraine, in which case you definitely wouldn’t want to be glued to your trading monitors)! You may have an appointment somewhere, you might decide to go on holiday etc. etc. So a week’s trading is (5 day’s worth of daily trading sessions) which can be 5 consecutive days (i.e. Monday-Friday), but it might just as easily span over 2-3 weeks!
So my trading year sits within 1st January to the 31st December year on year; but it might finish sooner! As soon as I get 240 daily trading sessions in the bag, that’s what I consider my years trading data complete!
You must mark each trading day on the ‘scalper sheet’ starting from number 1 (unsurprisingly) 😉 and continuing every day you trade all the way up to the final ‘Trading Year’ end, which will always be trading number 240, if you follow my methodology. This also makes it easy to compare like for like as each ‘Yearly Trade Sample’ consists of exactly 240 trading sessions. Also I have several trading spreadsheets compiled and setup within this 240 daily trading session framework to gather data/metrics/results etc. so as to be compared on a ‘Trade by Trade,’ Weekly, Monthly, Year on Year basis. Again, ideally I always start 1st of January and hope to be finished by 31st of December within the same year. But the main rule of thumb is to have 240 trading sessions, this is what constitutes a ‘Trading Year’ in my Day Trading arena.
Week No: This is simply a number 1-48. This is derived from the fact that 5 daily sessions equals a week’s worth of trading data for me. So 48 multiplied by 5 is 240, which is my full year’s worth of trading data. This is used so I can look at week by week metrics and zero in within these weeks, for example see what days of the week I traded, best trading days within these weeks, etc. etc. Metrics and data analysis is a very important topic in uncovering patterns in your trading which is more than essential and key to self-improvement, but this won’t be covered in depth in this post; another time, another post!
So to summarise; just having these simple ‘filing identifiers’ means you are serious about your record keeping and have a methodical and logical approach to your trading. As Dr. Alexander Elder once said;
“Show Me A Trader With Good Records, and I Will Show You A Good Trader!”
– Dr. Alexander Elder
Book:- The New Trading For A Living
Part 11:- Good Record Keeping
(An undated version of his old classic;
Trading For A Living).
2. Economic Calendars and Market Type:
This section holds 2 hyperlinks within the Excel version to directly open the following websites;
Investing.com Economic Calendar
ForexFactory Eco Calendar
Both of these hold some merit;
(and of course there are many others out there).
If you had to choose 1 ‘Economic Trading Calendar’ to use on a daily basis, you’d have to choose 1 which has a ‘LIVE UPDATE/ReFRESH’ feature. I use investing.com (In a PAID Ad-Free option available from their website). There are several reasons for this; 1 being when live data is announced within the market, investing.com’s calendar web-page AUTO refreshes to reflect live news as soon as it’s released.
Another plus point I like by subscribing, (Paying a small Fee currently $39.99 annually, which actually doesn’t sound a plus point)! But this means you now have the Investing.com website in an ‘Ad-Free format!’
This is worth the money as it unclutters the work-space and means less scripts will be loaded. This allows the website to load quicker and there’s less distractions from third party ads.
There is quite a good review on the EarnForex.com’s Blog (although already outdated) which gives a nice in-depth analysis and comparison of several Economic Calendars; titled;
Top 10 Forex Calendars in 2017
TIP: If you’re looking for a website that’s heavily devoted to Economic Data,
(apparently 20 million indicators from 196 countries so their website says;)
try the Trading Economics website.
Quote: “Our data is based on official sources, not third party data providers, and our facts are regularly checked for inconsistencies.”
Although Investing.com’s website is illustrated as being slow in loading times; in their Ad-Free format all is good. But I’ll let you into a little ‘Hack’ link that offers all the benefits without the slow loading times! 1st I advise you to read the above article if you haven’t already done so. Your trading style might favour using a different Calendar. Use my following link,
My Economic Calendar ‘Hack Link’
An economic calendar that’s extremely light on scripts! 🙂
I don’t usually recommend websites with paid subscription services, but there is 1 I want to share with my readers that is still flying slightly ‘Under The Radar’ and does hold real value if you want to day trade the FX markets around economic events. The website is called NewsImpact.com
In Brief; I came across this way back in 2008 on the great forum for users of Metatrader; MQL5 forum. It was a tool designed for ‘Forex News Traders.’ This FX software has amalgamated a huge historical database of past major economic news releases. You can chose from a large array of Economic Data to be illustrated onto interactive forex charts around different time frames; including 1/5/15/30 minute charts! Now there’s a lot here I could speak about on this excellent product, but I’ll elaborate on 1 of its features that will aid you in ‘scalping the news.’
This is a feature they label ‘SpikeCharts.’
Looking at the above image you’ll see I have labels 1-5.
So what’s happening here?
- You can manually search in the type box for an economic release.
- Quickly view all the different pairs and see what pairs are impacted the most due to this data release (Very handy feature when learning about the Forex correlations and getting a handle on volatility).
- Charts can be viewed by pips or rate on its Y axis.
- 5min price spike rally on the EUR/USD currency pair. (+47.1 pips).
- 5min spike sell off on USD/CAD currency pair. (-79.9 pips).
Here’s a Direct Link To Their Short Spike Charts Tutorial Video
So a few features in summary;
- You can instantly switch between the actual FX price and the market movement in pips.
- Charts house all historical and deviation data for every news release.
- You can quickly compare pairs to see which spiked most over M1, M5, M15, and M30.
- More than 30 pairs with historical data going back to 2010.
- More than 70 economic indicators.
- Can filter economic indicators by region etc.
- Other features offered include price and news alerts sent to mobile.
- Also offered, low latency ‘DataFlash’ realtime economic news widget.
Maybe it’s worth taking a free trial for 30 days, and if you do subscribe to their PREMIUM VERSION, the cost comes out @ $20 per/mth. Very reasonable IMHO. If you want to trade and ‘scalp the news,’ then this is seriously worth taking a closer look at. I highly recommend it.
Market Type: This idea 1st and foremost is a belief! If you think having a ‘Bigger Picture’ of where the market seems to be in terms of Bullish or Bearish with some volatility added into the mix then this may be useful to you. This idea has been developed in recent times and has become more popular and mainstream by Dr. Ken Long and Dr. Van Tharp.
I could write a lot here about this topic, but I don’t want to reinvent the wheel. So to summarise what ‘Market Type’ is and how to use it please read the following synopsis:
It really is a snapshot in the ‘NOW,’ to give you an idea what the market is doing presently. Depending on what market type you have currently, it will give you an idea in how ‘best’ to trade this current market type (by giving you an ‘edge’ in what trading system to use) that is skewed to perform best within the conditions of this present market. Trading is a numbers game; you learn to play with an ‘edge.’ If the ‘Market Type’ is telling you that you are currently in a ‘Volatile Bull Market,’ then the statistical probability to have a positive expectancy (i.e. make money) is to trade a system that is likely to work best under this type of market condition. Better to trade a system that is designed to perform best within the current market type!
Primarily there are 6 market types (Although you may use more).
An added bonus of knowing the ‘Market Type’ is it gives you clues; as in helping you decide ‘How Much’ capital to risk per trade. Being in a highly volatile environment means your awareness and focus on ‘Risk,’ IE protecting the downside and reducing your exposure is heightened and intensified.
“I’m Always Thinking About Losing Money As Opposed To Making Money. Don’t Focus On Making Money, Focus On Protecting What You Have.”
– Paul Tudor Jones.
Key words here to remember are;
- ‘Useful.’ Use this only if you find it useful within your daily trading regime.
- ‘Belief.’ It is still a belief! Use it if you believe it will have a positive impact on your trading.
“I Would Never Die For My Beliefs Because I Might Be Wrong.”
– Bertrand Russell
- ‘Strategy.’ However you trade, whatever system you use, you’ll really need to know under what ‘Conditions’ your system performs best. Using a ‘Market Type’ as a categorisation tool for market behaviour means you can quantify and qualify your system, i.e. you’ll be able to choose a system to trade that day that statistically is more likely to perform well as you’ll use one that you’ll have developed to produce the best returns under this market type condition.
- ‘Objectives.’ If you believe you can meet your trading objectives by utilising a strategy and trading system that has a connection with market type identification, then logically all you need to do is to establish the current market type you need to be trading that meets your criterion!
How you decide to configure your ‘Market Type Indicator’ is up to you, it’s subjective and is somewhat dependent on your ‘Trading Timeframe’ i.e. if you are a swing trader, position trader etc. From the following links Dr. Van Tharp and Dr. Ken Long give you some good ideas and describe how they use ‘their ‘Market Type’ or ‘Market Classification’ indicator to their advantage.
Below are some website links you visit so as to look deeper into this useful indicator,,,(if this is your belief)!
Van’s Market Type Classification System
Why Market Type is So Critical
Market Classification System word.docx download
Market Types: The First Key to Forex System Development
Understanding The Different Market Types and How To Trade Them
I’ve created a downloadable folder of reference material relating to the subject of ‘Market Types.’ This zip file contains the various web pages mentioned above so you can view them offline. I’ve done this as some of the links (Particularly some of the Van Tharp pages) appear to be offline at the moment. This is due impart I feel to Van completely redesigning his website; so some old pages haven’t been uploaded or indexed yet; which would mean you might have to view them as cached pages via archive.org. So to save you all this bother, all the pages + some extras are within this ‘Market Type.zip‘ file.
Enjoy the read!
At the foot of the ‘scalper’ trading worksheet is section (12) which refers back to this section (2). This section 12 just depicts a quick view ‘legend’ that links the (6) main market types to a number. This means you can quickly enter in a number in the market type box that corresponds with its associated market type.
(Example: if the current market type is ‘Sideways, volatile,’ enter in the number (3) in the market type box that’s top of the worksheet; simple!).
Here you’ll find the link to download any or ALL the worksheets that have been included into this post. They are in PDF or excel format.
Coffee donations are always welcome and greatly appreciated!
(This post has only taken me 5 minutes to produce…..humm..🙂
Download these ‘Trading Orders’ Worksheets now for FREE!
3. Today’s Target / Day’s Result.
These actually are very important areas to focus on; but probably not for the reasons you would expect, so please read on……
You need monetary targets, financial goals; yardstick markers so as to assess and measure your trading progress. If you don’t have a daily trading target (financial or process target), then you don’t have anything to gauge your trading performance with for that trading day. These 4 cells allow you to enter in monetary amounts and % amounts.
For example; there’s a (£’s) and a % amount for your current day’s target which you’ll have pre-determined (derived from your projected year end goal (£’s) amount) and its associated current day’s target %. This quite simply is your current day’s monetary target amount, (IE £1000), as a % of your current total account equity. As an example; if your current trading balance is £100,000, then the % increase for this trading day if you secure £1000 profit on the day will be a 1% gain, as £1000 is a 1% gain of £100,000).
All makes sense for far I hope?
The ‘Day’s result quite simply is the amount you have made / lost for that day and what this figure is as a % of your days starting account equity.
So at a glance, when your trading day is over, you’ll have a written amount for what your monetary target was (£’s & %) and what the actual monetary (£’s & %) amount was realised by the end of that trading session.
“Fine,,,,but hold on here DowBoy,” I hear you say out loud! At the start of this section (3) I said, “These actually are very important areas to focus on; but probably not for the reasons you would expect.” So read the following but listen closely to what I’m about to say.
The ‘Today’s Target £’s/ %’ areas are true reflections of distance you have so far travelled and cast a distance still needed to be covered to reach YOUR stated future 1 year (£’s) goal. This written monetary value is a ‘mnemonic.’ Its value is not in the actual (£’s) amount you have chosen to aim for; it’s true value is in how and what you’ve neurologically framed it to! It’s connected via a context that’s drawn from your own internal caption, your detailed canvas that’s a re-representation of meanings and values you’ve associated with as to what this journey once travelled will lead you to.
“Money With No Meaning Attached Is Worthless!” – DowBoy
This (£) number is an expression not based on hope or desire, but on one of potentiality entangled with probability. If you truly have done the work, written, narrated and painted your canvas so vividly that you can tangibly touch, taste, smell it, hear it and see it as real in the now, then by quantum law this reality already exists! Internally; yes, but it is a chosen choice, a possible potential that can be manifested; on some level it exists and thus is reality suspended in a potential form. All you have to do is follow the steps in your trading plan that will keep you on track to cover the distance needed to reach what you’ve set out to embrace. Everything in the universe is energy, so understand the following;
- Your internal world has an effect on the external world.
- Your thoughts lead you to contemplate choices, which leads to behaviours. So think wisely and be careful what you chose to pay attention to.
- IMPORTANT! Remember this; you don’t get what you want in life, wanting £100,000 isn’t going to make it appear in front of you. But the hidden field of nature responds to who you are BEING! So, BE-DO-HAVE!
(This Involves Action, (DO), A Derivative Of Your Personality, Which Is YOUR Own Personal Reality).
- What you focus on / pay attention to and who you are being;
(a representation of your beliefs, values and principles) in the now is what gets you rewards and results in life and in your trading.
Be Aware: People say thoughts aren’t real as every thought is only happening in our own private World. How can a thought be real if no-one can see it right? But your (£) number is a scripted number taken from your own show, playing in your own theatre that in the near future can soon have an outside audience. A thought is very much real! Whilst I can’t see your thought, hold it, touch it, (which would be a crazy thing seeing as they reside within that 3lb of grey matter perched precariously upon your shoulders), science tells us that; as an example, a negative thought can in reality make you sick! I’ll say that again.
It’s 100% proven that by thought alone you can make yourself sick. Also positive emotions can and do open the doors of possibility while negative thoughts limit our ability to see potential solutions;
(Again scientific fact).
Thoughts are very much real my friends.
So if you want to manifest your (£) year-end goal;
THINK / BE / DO / HAVE!
(PDF Links Available for above articles If you have trouble accessing
Web Pages)… Offline PDF Thought Articles
It’s Been Said That Thoughts Aren’t Real. Wrong!
Thoughts Are More Than Just A Catalyst For Real;
All Perceptual & Physical Realities Are Entangled With And Manifest From Thoughts.
Thus We Must Concur That Thoughts Are Part Of Reality & Thus Are Very Much A Part Of Real! – DowBoy!
There’s another important component that plays into this mix that I haven’t included a box for within this ‘Scalper Worksheet,’ but needs a mention. It’s a (%) that most traders don’t consider or even realise exists! This has a strong binding, a coherent connection that links to your vision, your mnemonic (£’s) value… understanding this will set you apart from the
Current 79% of traders that are playing the loser game;
(A figure taken from the retail accounts of IG’s homepage as on 11-12-2018).
This (%) is your…
‘AVERAGE TRADE GAIN.’
In the past I’ve had to create several utilitarian ‘Day Trading Excel Calculators’ to resolve many different scenarios. A
‘Day Trading Expectancy Simulator‘
to help in assessing position sizing and probable outcomes. I also created a useful ‘Losing Streak Probability Calculator.’ to help answer trading questions I’ve had that have needed specific calculus to reveal much needed answers. The image to the right is 1 trading spreadsheet I created years ago to help me bring to fruition several numbers, one being my 1 year trading (£) goal number. Importantly, this also reveals my ‘AVERAGE TRADE GAIN’ number in (%) and (£’s) over my desired length of time. I’ll give you a quick example with relation to the following image, one I personally use (among others) to help me visualize my trading year ahead.
(Click the image above to enlarge) 🙂
So if we take a look at the above ‘Day Trading Quick Projection Calculator’ for (£’s) you’ll notice….
- The right hand side calculator has a starting equity set @ £100,000.
- You’ll see the ‘No. Trading Days’ for the full year set @ 240 days.
(Meaning 240 individual day trading sessions equating to what I consider to be a full year of trading data).
- You’ll see I have set an AVG trade gain of £1000.
- This gives me a year end projected target of £340,000.
- So the AVG % daily trade gain is 0.51%
The above is important. Most traders whom look to make a £1000 on the 1st trading day see only that this is 1% of your £100,000 trading balance. They then proceed to try to make 1 or 1 ½ % each day compounded over the full year. This can lead to fear and anxiety when trading days just don’t work out for a myriad of reasons. Winning also involves losing, and expecting to win every single trading day year on year is unrealistic, foolish and shows emotional immaturity and lack of understanding. Best you become a broker and work for the other side as you certainly won’t make it as a retail investor.
“Without Even Having A Clear Year End Target To Go For, You Have No End Game. By Definition A Game Needs A Starting Point & End Point….
YOU NEED AN END GAME!”
From the above you can now see that whilst making £1000 (which is 1% of £100,000), my initial stake;
I’m actually targeting a future year-end total OF £340K, this means that I need to average a daily gain of 0.51% over the course of my trading year, and NOT be focused on an irrational 1 or 1 ½% compound figure which most traders would be focused on for reasons only a novice could explain. Please read the following quote (just to drum this home again!);
“Begin With The End In Mind!” – Stephen R. Covey
You need to work back to front! Start at the finish, it will make you feel good for one thing! 🙂 As it says above, begin with the end in mind, this will reveal your ‘AVG Daily Gain’ needed to achieve your objectives. This also manifests your day 1 target figure in (£’s) rather than wildly making a decision to attain (£x’s) based on how you feel, a guru recommendation, a hunch or a forum or friend’s tip! These guesses the novice trader mistakenly labels and defines as ‘money management’ or ‘asset allocation!’
Just to summarize;
You must have clarity and focus on your year end (£’s) goal, and your AVG daily (£’s) gain needed to realise this goal; that you adjust daily. If you are pushing for targets that take into account compounding, just remember to check this average gain figure daily that’s Adjusted by the amount of trading days you have left and your current account equity. Do the math! Of course there are other factors regarding targets, IE what’s your expected return per trade? Do you know your win rate? Losing %? How many trades do you make (ON AVG) per day? (We’re talking EXPECTANCY!). What risk adjustments do you have in place taking into account current market volatility and the market type you will be trading that day? Etc. etc… but K.I.S.S. is the answer. Keep it simple stupid!
“Know Your End Game! Know What Each Step Needs To Be On ‘AVERAGE‘ To Get You To Your ‘THERE!’
The Objective In This Is The Result, Not The Process!”
This now eases some subconscious pressures and anxieties relating to the shear fact of knowing what your daily trade allocation should be, taking into account all the above. Your daily target is to avg. 0.51% (as per example) per day. Do this and make any needed adjustments along the way and all will be good. If my end of day results produce a positive equity gain above this figure, then I’m more than happy.
4. Trading Objectives:
If I could sum up what gets you real results in trading and in life it probably would be the following;
“Have ‘CLEAR’ Objectives That Project Deep Razor Sharped Focus & Polished Behaviours Onto Whatever You Are Doing In The NOW ! Behaviours Get You To Where You’ve ‘Planned’ To BE! But You Need OBJECTIVES!
The ‘BE’ word stated above is intentionally ‘BE‘ and not GO! It’s not a destination you seek. It’s a state of ‘being,’ it’s not a place you’re trying to get to, it’s a state of MIND that is held in the present moment. BE NOT DO!
So all this starts with knowing ‘what you want,’ then crafting a game that lets you get there. Games involving money usually have a cost associated with entry; BE WILLING TO PAY THE PRICE to win the game!
Life is but a game my friends.
To drum this topic home; a short true but sad story.
A very successful business women whom started a business from next to nothing and turned it into a multi-million pound success over time was asked how she had been so successful and also if she considered herself a success in life.
Gazing from the outside as an observer it looked as if this rich powerful business magnet had everything anyone could ask for, everything related to success one would assume.
But she paused for a moment, then tears began to run down the sides of her cheeks. She announced that in life she had failed, she had failed miserably!
With this the interviewer was perplexed, he felt quite awkward as his line of questioning had made the lady very upset and emotional; anything but the reaction he was expecting. She continued;
“My son; I neglected my son for a large part of my life. I put the business 1st above anything else. I worked so hard and was never at home for him when he was growing up. He turned to drugs and eventually took his own life. I failed. In life I truly failed. I failed my son, I failed in life,” she said.
I mention this sad story to illustrate 2 points that are extremely important.
- There’s more to life than just trading the markets! Do keep an eye on having ‘objectives’ that aren’t related to trading. Being ‘Successful,’ being a Super Trader as the name implies means having a rounded personality that gives purposeful time and energy to the other key areas that make up a blissfully fulfilling life. Don’t just focus on wealth like the tragic story above. You can have it all. Life can offer you an abundance of health and happiness away from your trading monitors, but only ‘IF’ you model your game this way!
- You don’t know or can’t gauge success by an outcome! It’s only by comparing it to, and knowing your initial objective can you truly understand and benchmark if your outcomes are successful! So….
“You Must Write Down What Your Main Objective
Is For Each Trading Day.
Stick To A Maximum Of 3 Objectives. Know What’s No.1!
You Must Clarify & Quantify.
Knowing What You Are Doing Isn’t Enough.
It’s Knowing WHY You Are Doing What You Are Doing!
This Is The Key To Having A Successful Trading Career.”
Imagine now having a trading mentor sit beside you watching you trade. Imagine it’s the morning session; the opening bell of the Dow Jones.
What advice can he truly give you about your trading style, your exits you’ve taken, your position sizing models and technical setups? How can he critique your technique and trading system in real time if he isn’t aware of, or
Doesn’t Know What Your ‘Current Day’s Trading’ Objectives Are Before The Opening Bell Rings?
He can’t quantify anything you do accurately! He doesn’t have truth! His objective comments will be coloured biases steeped in fanciful presuppositions. Without the knowledge of your WHY, your trading window remains shut to the outside World.
(If you do seek a trading mentor, and he doesn’t ask you at any stage; “What are your trading objectives?” Kindly ask him to leave, preferably via your window!)
Trading behaviours in themselves won’t offer ‘Trader’s Truths’ without 1st knowing the reasoning behind why you are doing them! As a trader you seek the ‘Trader’s Truth.’ Truth can only come from knowing your objectives and NOT via an analysis of what you did and what you did not do. Analysis offers clues, but nearly every time judgements contain bias. You can’t truly evaluate a spreadsheet of figures accurately unless you know what they need to be judged against and viewed from in a systemic holistic manner.
You cannot analyse the structure, your elements that make up your trading system without a complete understanding of WHY from this ‘Systemic’ viewpoint. You have to evaluate your behaviours in terms of their contribution to the whole. You have to look at these parts systemically, not autonomously; as only through design do you deal with the whole and thus move through to the parts.
Solving your problems in trading IS by design!
To clarify; a ‘Trader’s Truth’ is his or her;
Trading Objective ÷ (Behaviour – Environment) = Trading Truth
You choose when to trade, what market you want to trade in. You also choose where you want to trade from. An office? At home? Mobile? Laptop? Trade alone? On a Trading Floor? etc. etc. These scenarios give you your chosen environment.
Your behaviours are thus a tailor made version, an adaption that’s formed and skewed by your choice of environment you’ve selected to trade in. These behaviour renderings leave clues; a chronicled register that depicts patterns in your trading behaviour; and it’s these patterns you seek to uncover. Part of your progression in trading is a constant uncovering of truth mainly by pattern recognition. If you are 100% clear on why and HOW you SHOULD be trading, the resultant metrics derived from your patterns of behaviours you’ve manifested can be deciphered as you have the code; and the code is born from your objectives! These results are now understandable, actionable learning outcomes!
Now this is ‘WISDOM,’ which is the square root of ‘Experience’ according to Chip Conley,
(His book was an entertaining read, take a look). Enough about Chip..let’s move on.
This isn’t rocket science. You don’t have to be a mathematician, a computer scientist or logician akin to Alan Turing. This isn’t the Enigma Code you’re trying to crack. Just understand this;
“Having Trading Objectives Means Having The RIGHT Keys To Open ANY Door You Chose To Frequent! This Is the Power & The Beauty In Having Clearly Defined Trading Objectives.”
Before I finish up on OBJECTIVES I just want to bring to light something that might not be 100% true, but it could be useful. In life and in your trading always take on-board things that are useful, even if they presently can’t be deemed true! Years ago I came across ‘PCT,’ Perceptual Control Theory, a very interesting and novel way to understand and make sense about one’s behaviour, IE; why people do the things they do. Watch the following short PCT video that highlights the basic principle of PCT with a rather neat rubber band demonstration! (It’s only a few minutes long).
The main premise encapsulated within the theory is that we ARE in control. We have many internal set targets; goals, OBJECTIVES and when we engage with our external environment, all the actions we see are an actual process of trying to meet a goal, an objective. This isn’t a cause / effect universe! It’s not based on stimulus / response. It contradicts the classical notion of linear causation of behaviour by stimuli.
This is a model from THE INSIDE – TO THE OUT!
BEHAVIOUR IS THE CONTROL OF PERCEPTION!
PCT is about control, meaning ‘PURPOSEFUL BEHAVIOUR.’ This is an important subject to be aware of and grapple with, as once you really grasp this concept, you’ll never look at behaviours again in quite the same way.
So having ‘CONSCIOUSLY’ chosen actionable goals and objectives means you enact purposeful behaviours. Humans are goal driven ‘hard wired’ controlling systems at the core. This means we act in ways to achieve and maintain our preselected perceptual states, through actions on the environment that also (and grasp these next few words), CANCEL the effect of any disturbances.
“YOU DON’T RANDOMLY REACT TO EXTERNAL STIMULUS!
THE ACTIONS YOU TAKE ONLY HAPPEN BECAUSE OF YOUR PREDETERMINED OBJECTIVES!” – DowBoy
So envision that you are acting like a thermostat. You’ve pre-set your ‘IDEAL’ room temperature to 20 degrees and someone comes in and leaves a door open to the outside environment, and it’s a chilly 5 degrees outside! So being in control you kick into action and adjust (turn up) the heat for a while to get your habitat back to your desired pre-selected reference set temperature of 20 degrees.
If you, (Mr. thermostat) have had a different goal, a different room temperature of say 10 degrees and someone came in and left the door open; but this time the outside temperature was a summertime 30 degrees, your actions would need be totally different!
You’re looking to enact upon the environment to get what you want, your actions being a reflection to what’s needed to bring about this homeostasis.
If the outside environment was the same as your set ‘reference level’ room temperature, and the front door was opened, there wouldn’t be any need for you (the system) to take action!
The more discrepancy you have with your ‘preselected objective’ compared to your external environment you are experiencing in the now, the bigger the effort you have to make to reduce it. Only once you get your discrepancy error to zero do you get what you want!
But don’t think having objectives doesn’t come without possible ‘Conflicts.’ What if you have several objectives each with independent settings (different outcome criteria) trying to control the SAME perception?
This is when conflicts arise.
Example: Sticking with the heater analogy; what if within the same room you had a heater and an air conditioner. One wants the room to be 20 degrees the other wants the same room to be 25 degrees. There’s obviously a conflict here. Mutually incompatible goals that will both expend a lot of energy with neither system obtaining their desired goal. They are both interacting with the same environment but have different ideals. This is an analogy of how inner conflict occurs.
Example: What if you are trading and you ‘FREEZE!’ Fear has struck you. You’re confused as price just broke below a significant support line, but you are long in the position. You’ve frozen and are stuck with the burden of indecision as you have a rule that states you should sell if price drops more than 10%; yet at the same time you have several technical indicators screaming at you to ‘add’ more as it’s oversold and on higher time frames it’s still a strong buy with no news flow negatively affecting it currently from a fundamental standpoint.
What do you do?
You need to change how the situation occurs to you next time.
Inner conflicts CAN ALWAYS be resolved. You need to take a step back and look systemically at the design of your system as a whole. You need to adjust the different ‘control variables,’ settings you have for each of your interactive parts and change their reference values. It’s a design problem! The system design created the reference signals in the 1st place. So if you change the design you change your system! This will lead to different objectives, hence different behaviours, hence different outcomes.
PCT – Further Reading:
Please do take a look into PCT as I feel this might be useful and hold some value for you. Do try to grasp the theory. Whilst some of the concepts put forward in PCT Theory such as ‘MOT’ (Method Of Levels) are extremely subjective and remain unproven; it’s basic foundation has merit and is used in a wide variety of psychological settings.
Here’s a couple of useful PCT website links that can start your inquiry;
Living Control Systems Dag Forssell’s Website.
Note: The above website has a nice PDF download that is a good PCT introduction. Click the image above to directly download the ‘pct_readings_ebook.pdf’
International Association for Perceptual Control Theory
The above website features links that connect you with an abundance of resources for further study.
Final Words on ‘Objectives:’
The section for objectives which is on the ‘Scalper’ spreadsheet primary is a focal point to anchor what’s really important for you on that day. Your objectives governed by your held beliefs, values and principles (all designed within a systemic construct) will determine your behaviours. Whatever the external environment throws your way, you’ll react in a way that’s in accordance with your reference signals, the governors; IE your pre-set objectives! Note: Stick to a daily maximum of no more than 3 objectives.
Reminds me of a great quote;
“If you have more than three priorities, you don’t have any.” – Jim Collins
The ONLY way you will get what you truly want in trading and in life is by enacting future oriented goal driven behaviours. Without constantly adhering to clearly defined written ‘TRADING OBJECTIVES’ you will be another fatality; another IG trader that resides within their 79% statistic; clients that have failed, gone broke and many losing their shirt due to never trading with or having clear objectives!
5. My BIG 8:
This section gives me a snapshot of the big ones! I need perspective for the day ahead. This landscape gives a quick panoramic of what I feel are important markets that I want to keep an eye on and one’s I might possibly trade. This also gives me a daily range bound vista of what (on average) I can expect these instruments to move generally within a day. ATR (if used correctly) can be useful and fits within my chosen style of trading.
As a note: I actually use several ATRs with different lookback periods. I don’t want to go into details here as my trading technique is designed for me and thus on some level wouldn’t be applicable to anyone else. All I’ll say is that IMO; ATR’s are important indicators for day trading (or derivatives of), and knowing what the average daily range is, AND if the ATR is in an upwards trend (momentum is increasing over the short term) or decreasing gives me clues and helps me gauge whether an entry still has enough travel to play out for a level of return that would satisfy it’s associated risk. (Enclosing price within envelopes is 1 such derivative of ATR that can be useful, but that’s another post)!
Just knowing and seeing the previous close on paper gets me to take notice of what the opening bell prices will be with reference to this previous close. Price is KING, and prices leave clues. (For foreign exchange, which is considered a 24-hr market (Fri-Sun) I look at the main London market closing time as a point of reference). On my charts for any FX I might trade I have these London timed closing prices marked.
This area, ‘My BIG 8’ is now YOUR area, adjust to suit your needs. It’s a snapshot, a ‘quick glance’ a ‘check in,’ to make sure your eye is on the ball. Use it, alter it as you deem fit.
6. Economic Events:
Any day trader serious about making money consistently in the financial markets will be using some form of data that encapsulates economic events. You need to be aware of news, market trends and cognizant of the bigger picture; global events matter! An economic calendar allows one to view these at a glance.
You’re seeking another edge. One strategy is to capitalize on the space between economic announcement and market reaction. You MUST know WHEN (time/day) and WHAT important events are going to happen that can ‘shift’ price in either direction.
You must also know the HOW! Having a deep comprehension and understanding in HOW these events intrinsically work and how they can impact ALL financial markets gives you an edge. Connecting these dots can reap great rewards as most traders (80/20 rule) won’t have done the work; they just won’t have researched and studied to clearly understand events in terms of correlations and there inter-market relationships. Knowing HOW on top of WHEN and WHAT elevates you into a very privileged position in which you can behold any market holistically. Every sector, indices, commodity, Foreign Exchange, Derivative, etc. etc is connected to something else by some degree. Economic Trading Calendars encapsulated by their market moving indicators depict events that must be understood from a WORLD view; the term ‘Butterfly Effect’ springs to mind! Understanding the bigger picture grants you a profitable edge; a competitive advantage as your wider periphery and depth of vision offers opportunities that’s the majority of traders won’t even be aware of.
To sum up all the above in 1 sentence;
“Being Better Informed Offers You The Ability To Predict Market Movements And Make Smarter Decisions!” – DowBoy
So onto the actual entries themselves.TIME: Not much to mention here apart from stating the obvious; you must know the time these pre-scheduled macroeconomic events will occur. Through experience you’ll also come to notice how individual markets ‘pre-empt’ and ‘price-in’ certain events way before the actual event occurs. A pattern often seen is when markets consolidate price within a tight range ready before a high impacting event for ‘The Breakout’ play to unfold. You could play the ‘pre-event’ for these larger impacting events if you know historically (looking left) on your charts what the average moves were so as to capitalize on these recurring patterns with preconceived ‘range bound’ strategies.
“If You Fail To Plan You Plan To Fail,” as the saying goes. Being aware of times to be in and times to be out is a methodical and rational approach all professional day traders are consciously aware of.
Sounds paradoxical, but being OUT of the market IS a trading strategy if you understand the reasoning behind it and the opportunity and timing of re-entering is preconceived.
“You Must Know How To Play Each Instrument.
Learn To Play It As Well In Your Mind As You Do In Real Life!”
COUNTRY: Where the events take place is again an obvious criteria to note. If you’re trading the FTSE 100 (An Index:- UK’s top 100 companies by market cap), and for example new UK unemployment figures come out that are very poor, expect some volatility! If it’s a GDP announcement that’s really bad; oh boy, look out!).
(As a note: Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions)
Also I spoke about correlations earlier. Knowing which country and when a high impact event will be due can set up possibly rewarding trades in other markets. Global markets and asset classes are more interconnected than ever before, and in this shrinking financial landscape, it is essential to know how these are affected by their intermarket relationships; IE certain Foreign Exchange currency pairings could benefit from a specific country economic data release.
“A poll taken by the Journal of Technical Analysis asked the membership of the Market Technicians Association to rate the relative importance of various technical disciplines. Of the 14 technical disciplines included in the poll, intermarket analysis ranked fifth.” – John J. Murphy
(Taken From The Introduction page xi,
Trading With Intermarket Analysis; A Visual Approach).
IMPACT: This is important.
We can slot impact events into 3 categories which are as follows;
LOW, MEDIUM and HIGH impact events.
If you are new to trading and want to start trading economic news announcements and data releases, may I suggest initially you should NOT! I don’t mean don’t trade events ever! I do mean it’s prudent to 1st watch and thus learn this particular trading arena. Every market and their associated events have very unique characteristics and idiosyncrasies that reveal tell-tale signs about themselves. Pick just 1 event initially to focus on. Study it thoroughly and seek to build trading strategies that ‘SUIT YOU’ to take advantage of these cues. Stick with this 1 event. Own it! Master it, then move onto another.
Trading is a mixture of art and science; so learning HOW to bake the right mix always comes before ‘placing your dough in the oven!’ 🙂
You need to understand the amount of heat (your risk) to set, and how long to set it for before opening it’s door and taking your hopefully ‘risen’ dough out.
Trading news and data driven announcements can be very lucrative.
You can make a living just mastering 1 play if you’re willing to do the work.
Everything has a price, and learning to trade economic news is a price worth paying!
EVENTS: Here you can enter a brief description of what the event actually is. If it’s a UK GDP figure being released I write ‘GDP,’ that’s it, it’s that simple.
Knowing what economic / market indicators are and how these events affect the markets is only part of the puzzle. It’s also having a perspective that can determine their probable impact as to how far it can push price and how it will trend (it’s unique characteristic, it’s ‘swagger’), and finally the markets ‘EXPECTATION’ for the event. Wisdom is powerful. Learning to anticipate the market’s reaction is a skill worth acquiring. The perfect quote;
“Economists Have Correctly Predicted
Nine Of The Last Five Recessions.”
I don’t want to get too involved here in methodology as it’s very subjective and what works with regards to my trading systems and set ups almost certainly won’t be applicable to you.
Just remember this;
It’s not what you hope will happen, but rather it’s what your perspective paints, drawing from your theory and plans that predict what will happen. As events unfold, you have mentally rehearsed and pre-determined your decisions, actions and trading behaviours you’ll need to take depending on each eventuality. If it breaks up, you have a plan, if it turns down, you have a plan. Don’t let your Amygdala get involved and try to run you decisions and subsequent actions in these HIGH impact events. Cultivate an almost emotionless state of being, a state of ‘FLOW’ whilst trading to intensify your clarity and reduce decision errors.
Trader’s Tip: Trading Screenshots! If you are looking to trade an economic event or have entered into a position based off an economic event, capture this trade on your mac or pc for further analysis and record keeping. Build up an historical database of your recorded trading charts over time with annotations of specific economic events and market moves that impacted your results. You’ll reap huge benefits and gain insights looking back over these past trading events, replaying your thoughts, decisions and actions that can help reshape YOU, how you trade heading into the future. The advantages of this practice are many and underutilized.
- You can relive the trade in your mind and recall memories to anchor to for future events.
- Marking your exact entry and exits points on the chart will give you points to focus on and assess.
- Mark positions that would have been optimal entry/exist points or points to load up. Always seek to improve.
- Write down the No. of pips/pts moved on the day, its highest high, lowest low on the day. View what % of the move you captured and if adjustments could be made moving forward to get optimal reward whilst still adhering to minimize risk.
- Make a note if there were any other drivers that affected price action; IE addition news release. Get as much information down onto the chart as you deep helpful.
- Include major support and resistance lines multiple timeframe agreements (1hr, 15min, 5min, 1min), depending on your trading style, strategy and system.
- Recapture how price action consolidates before major events on individual indices/FX pairs etc. Get clear how certain markets react to certain releases.
I think you get the picture. So enough on Economic events. Just remember that trading events is a skill; it can be learned. But as often is the case in this unforgiving arena; learning can involve a few hard knocks. Re-read the above, practice, practice, practice. Trading daily economic events can be a very profitable business in you put in the work.
“The Market Can Remain Irrational Longer Than You Can Remain Solvent.” – John Maynard Keynes
7. Trade Details: (& suppressing a trader’s EGO!)
Writing trade details of specific entries, exits, setups etc. can be beneficial to the day trader, but there is a paradox here; I shall explain…..
This order sheet being described in this post is called the ‘scalper’ order sheet. If you were truly ‘scalping’ the market; shadowing the ‘AXE’ on your level II screens, reading the ‘tape’ and utilizing ‘DMA,’ Direct Market Access to make a large number of trades per day; then writing anything down during this period of time would be near on impossible. Your FLOW state would be completely anchored and engaged with the order book on your screen(s). This type of trading is becoming extinct for individual traders due to ‘High-Frequency Trading’ and advancements in ‘Algorithmic’ and ‘AI Trading systems.’ The edge in ‘discretionary scalping’ has dissipated rapidly. Thus this section for trade details is really non-applicable for the ‘traditional‘ high frequency ‘Scalper.’ But for the day trader that is looking to hold for longer periods of time, possibly several hours or even till EOD, this still can be a helpful section to utilize; here’s a few reasons why!
There is hidden power in the pen.
I’ve included this section in this ‘Scalper’ order sheet as it gives one freedom. Freedom? Really? What does that mean in relation to day trading? Freedom? Let’s take a look……
With pen to paper you allow yourself to ‘express’ your mind at work. It’s another medium of interaction with the external environment; getting you fully engaged on the outside! A trader’s mind in ‘FLOW’ needs FREEDOM from the pressures and anxieties that are always self-inflicted from the inside and can attack and stab you at any time!
Trading in its purest form needs a measured mixture of expression and CREATIVITY to ‘FEEL’ totally free, and that’s a part of, and an expression of FLOW. Being in; trading in a ‘FLOW’ state technically harbours between arousal and control. Traders wear the glove of creativity whilst shaking hands with the unknown, as being ‘creative,’ having no fear or conceptual restraints means you ‘ARE’ free in totality, and by this definition you can be;
FREE to Thrive!
FREE to embrace RISK in a logical, rational and objective way.
FREE to make trading mistakes without damaging judgemental heuristics.
FREE to grow, improve, evolve, transcend.
FREE to trade openly, be lucid, intelligible, meaningful and fully engaged.
FREE to BE, DO, HAVE, be coherent and FREE to be a winner!
“Freedom Is Power. It’s An Expression Of Self-Regulation;
Being In Control Of All You Can Control.
That’s Liberating; That’s FREEDOM!” – DowBoy
Example:The mere fact that you are physically entering trade related details in your external environment means you are acting in a focused and coherent manner. This detachment elicits space from the internal negative impulses that seek to permeate through your body.
You’ll see under TYPE I have a tracker abbreviation MTBQ taken from my ‘Grading Codes’ page. This denotes a market type that paints a picture of the current market condition being ‘BULL QUIET.’
My SETUP is ENS 2 &7, meaning ‘Breakout Play’ with Multiple Time-Frame agreement. Stop, Entry and Targets are noted. The TARGET has a figure with (25) bracketed. This denotes a secondary target I was considering, 25 pts above the decay number of 11,000 DAX. Quite often price breaks through whole numbers with vengeance. But 10,995 I exited fully my position mainly due to weakness (divergences) in TA indicators. For me, the play was running out of steam. The trade for me was over.
#AS A NOTE: Trading ‘Decay Numbers’ these big whole numbers on the DAX / Dow / FTSE etc. is a common power play. Many traders get drawn into placing exits / entries around these key areas. In my example my initial target was 5pts short of 11,000 DAX. Often these whole numbers get touched, and often they don’t! IMO better to target the higher probability of it just falling short of the whole number and take profits after a very good run ( this 100 pts run added to existing price action was 99% of the DAX’s daily ATR ). If of course it did break the whole number and continue its trajectory into the heavens you have a new choice to make. (It mainly depends on HOW it breaks through, but that’s another post!)
“Every market has certain numbers that hold significance in that market.
Learn these numbers and use them.” – Thomas L. Busby
(Taken From p44, Chapter 3; Trading is a Numbers Game).
Book: – Winning The Day Trading Game
Be careful though with these plays. On 1 minute charts prices can spike significantly 1 way and before you can trigger your sell button it’s reversed 30 -40 pts (or more) in the blink of an eye. Even if you are still a discretionary trader, you need to be utilizing automated targets, stops and rules as it’s quite possible you won’t even get a fill, or the slippage will be hideously detrimental to your exiting mouse click.
Finally note my TRADE GRADE which has an alphanumeric number bracketed. This denotes my screen capture reference number so I can quickly find and view this when I come to examine my trades during my EOD debrief.
If you only fill in 1 cell, try at least to GRADE your trade immediately after your final exit. If you just can cognitively manifest a number (1-10) with 10 being flawless, you’ll anchor a memory to the trade that fires an image of trade execution, trading emotion and performance that you’ll be able to reference into you EOD debrief and frame more meaningful annotations to your trade’s chart you’ve by now screen captured.
Once you get into the habit of writing 1 trade metric into this sheet regularly for each trade you take, you’ll soon find you’ll be entering 2,3,4,5 details into the sectioned cells. Remember data collection isn’t good, it’s a start; but you need data so as to analyse and improve which IS good!
Focus On Process & External Behaviours
So focusing on one trade at a time, instigating a casual squiggle of your pen to enter a trade detail is a behavioural ‘HACK,’ and an example of control that also suppresses your negative self-talk that can strike you at any time.
A Super Trader can contain his ego, pin it’s chattering head down so it lays dormant and powerless. The ego cannot ever be removed, but the skilled Super Trader has mastered the art of controlling the inner self and can nail the beast into a single cell deep within his cranium, forcing it to cower and induce it into hibernation.
A simplistic act of putting pen to paper to depict your stop and entry, or price target will bolster your defence mechanisms as it visually reflects back to you evidence of who’s really in charge. You’re creating habits that loosen the bindings, breaking the chains with this sleeping thief that you’ve got tightly sealed and contained on the inside; knowing he can potentially rob you of your ‘natural’ inner voice at any time. Be on guard! Most trader’s preferred cognitive narrative that’s attached to their FLOW state needs defending from the bribes and demands of this devilish cynic that’s yearning to be let free. You must be alert, vigilant, on the lookout for any signs your demon has awoke as he’ll extort profits from your trading hours and hold you to ransom for all that you’re worth.
Don’t allow yourself to trade under it’s regime as then you’ll be the one imprisoned and constrained by this ‘crook’ that can rob you of all your trading profits in a blink of an eye! At times we all suffer and are subjected to detrimental and potentially corrosive chatter from within in varying magnitudes. Your EGO yearns to keep you in its ‘safe’ unexpanded vision of mediocrity, averageness and wallowing depression. Your fear is its blood, its life-force. It’s regular habitual routine of voicing the unremarkable and debilitating is it’s sanctuary it loves so well to dwell and bask in drip by drip.
“Be guided by commitment to your vision and not by your life principles or your concern for appearances, social expectations, egotistical
pride, or your irrational fears of catastrophe.”
– Ari Kiev
Taken from page 63 of his excellent book on
‘The Psychology Of Risk.’
I highly recommend this Trading Classic for emotional regulation within the trading arena.
So getting ‘out,’ letting your trading mind play on the outside; breaking free from these chains of your toxic ego; your ‘best friend’ that offers only distorted versions of reality is liberation!
Being totally focused on the outside and totally letting go of all constraints is liberation.
If you are liberated, then you have freedom.
Using a pen is 1 way to get out!
It’s 1 way to break free!
If you are truly free, then you no limitations, biases that can hold you back!
Super Trading is only available in the land of the FREE!
So having this area to write simple trade metrics allows one to become and be present in the ‘NOW,’ actively engaged in your external environment. Now you’re living and playing on the outside, removed and devoid from ego. You’re living proof that the age old battle that never ends is being won by physical examples on the outside, that’s under YOUR control.
Hand on pen, then pen to paper gives you haptic feedback that you, the true ‘I’ is in control. By simply allowing yourself to enter several trading metrics / facts / figures for your own mind’s eye to see, short-circuits the negative programs nature’s ego can render; but now you have the knowledge and the power to create a gap.
Super Traders carve out a gap between mistakes of your self-sabotaging dialog, your inner voice and your rational mind,
‘the real you’ devoid of ego.
Gaps can widen! This Gap having 2 parts (The EGO & the Rational Mind) are the two sides that make up the equation. By constantly working on improving your inside, you can widen the gap from a small fracture, a crack that can easily be re-joined, to one the size of a gorge or canyon that will stay disconnected for ever! Best to view your ego from afar; so it sounds ever so faint, a distant call rather than hear it as a bellow that could shatter your World in the blink of an eye!
So use this ‘Trade Details’ section of the orders sheet as you see fit. Trading is a game of probability wrapped in possibility. Remember that self-sabotage by negative self talk is not just corrosive for your trading but for your everyday life. Any edge you can find that can short circuit the system and sequence patterns of positive behaviours that are useful in your external World cannot be underestimated. View the power of the pen as dopamine on steroids! Yes a ‘Fulgor Nocturnus‘ really is that good!
8. Trade Notes:
I’ve covered the ‘Power of the Pen’ so you know WHY you are writing and some of the advantages and benefits this presents to you. In this section you need to be focused on verbalizing ‘mini’ details of trades you have taken during the day with pen in hand. The point of this exercise is not to cram as much information as possible into a narrative, but to swipe with ‘bite sized’ snippets, facts and figures that capture the essence of the trade so as to mark an outline for the picture your mind will paint when reliving the event. Being consciously aware of how best to convey the re-representation of the trade’s ‘character’ in a reductionist form will help anchor this event for better recall when it comes to your EOD (End Of Day) ‘debrief;’ that is of course if you incorporate such a practice in your daily trading routine!
“Reductionism! The Manner In Which You Express Your Past Trading Thoughts & Behaviours Is A Critical Component For Transformation.
Understand This ‘CREATIVE’ Behaviour IS A Cognitive Process
You’ll Develop Over Time.
A Few Words In Essence Can Tigger
A Perceptible Trading Epiphany!” – DowBoy
Linking snippets of words / figures to visualizations of trades you have made is an important skill to attain. Trying to ‘re-represent’ an event in brief word form is a cognitive art that’s relevant to reasoning, problem solving and creativity. It allows you to represent existing perceived acts and knowledge that will outline a perspective, a framed schema that acts as a memory for the mind and body to later ‘play’ with. You’re a trader using entrepreneurial skills by being innovative, visionary, acting with leadership qualities that guide you towards growth in all areas of your trading.
“The Trader’s Long-Term Success Hinges On
Entrepreneurial Skill.” – Brett N. Steenbarger, Ph.D
Taken For His Wonderful New Book;
Trading Psychology 2.0 (Page 201, Key Takeaway)
It’s important to capture the essence of a trade in word form. It’s also pleasantly surprising the impact just a few words can have in regards to recalling past events. Combining a brief narrative depicting a trading event, instigates the mind’s neurons to initially fire a cacophony of random electric impulses that overtime can become an expanded and very structured neural network. This ordered architecture of mind is formed via repetition, associative learning; by repeating this experiential process over and over again.
“The Mere Act Of Repeatedly Writing Snippets About Your Trading Events Opens The Window Of Opportunity For Improvement, Leading To Transcendence.
Reflection, Contemplation, Examination & Debate.
Adaption, Creation…… The List Goes On.
All Powered By Your Words, Told With Your Pen, & Acted Upon Via Your Cognitive Abilities In Reasoning.
Re-representation Is An Essential Skill If Your Trading Journey
Is To Be One Of Growth, Evolution & Transformation.”
Because we are trading the markets as we see them, (trading our beliefs and biases) and not as they truly are we quite often get ‘stuck.’ We make errors, mistakes and our language we use offers clues in how we saw this event unfold. Remember your mind is a switch. Wherever you mind goes, the brain (and therefore the body) can follow instantly. Making short-hand notes relating to your trades will help spark and trigger your brain to recount the event as your mind saw it when you come to do your EOD debrief. I mentioned earlier you should take trade screenshots that have annotations stating technical details and other notes of interest. These charts combined with other notes penned here really help to crystallize your past trading event into a timeless state of ‘suspended animation.’
“If You Can Capture A Past Trade In Your Mind’s Eye, Preserved, Void From Decay;
You Can Relive This Event In The Now.
You’ll Have The Benefit Of Adding The Overlay Of Hindsight. Rewiring Your Cortex By Painting An Optimal Outcome Permits You To Generate A Future Event Via This ‘Mental Rehearsal’ Which Previously Didn’t Exist!” – DowBoy
Small shifts in how we see these events can lead to big change. Making the effort to write short brief notes really can lead to a few aha’s in how you come to review past events; Quantum Leaps can be made! Most traders;
(nearly all one would imagine) don’t possess a photographic (eidetic) memory. Traders are not memory athletes (although some think they are). Any habits that can help you paint a trading picture more clearly and help to illustrate and relive the event in a more vivid and animated way is always good thing in my book. Success has a face, and using ‘Trade Notes’ to help express more meaningful and life like ‘PAST’ trading events are very empowering tools that need to be sharpened often. Now having new and refined trading scenarios, you’ll powder the face of success into the picture you want to see.
Before I discuss the ‘E.Q’ Grades and ‘T/A’ Grades that will conclude this section on Trade Notes, let me reference a paragraph taken by the famed French psychoanalyst Jacques Lacan; called;
“The Most Controversial Psycho-Analyst Since Freud!”
Noam Chomsky said that animals and small children live in a world of “states” and not in a world of “objects”, in a world, that is, without order or coherence. Language alone allows the order of the world to be instituted, and then allows acts of reflexion and of consciousness upon the world and upon sense impressions to be carried out. Language serves above all as an organ of thought, consciousness and reflection. It thus provides the mind with an autonomy from the lived experience, allowing it to maintain a distance between itself and the lived experience.
(Anika Lemaire – Jaques Lancan page 51, published 1977).
Throughout this article I’ve really tried to emphasize how important your trading language is and how by installing a ‘register;’ a catalogue of consciously chosen descriptive words to cull from, you’ll eventually and subconsciously (via repeated reiterations) be able to describe your trades in a way that is anchoring the events to form a constructive feedback mechanism that’s transmuted from a verbal construct into a visually internalised composite.
Recalling these trades in a higher resolution and clarity via your consciously chosen trading language that’s focused on recalling key trading events in mind and body, submits evidence upon your internal jury, the judge and board of inner voices that seek satisfaction. This internal screen portrayal loops into your assessment and evaluation framework to assist in your personal growth and trading evolution. Manifesting perceptible past trading events into surreal inner visual representations that have innate qualities is a skill that can be acquired with conscious effort. A future destiny of trading success and fulfilment can be attainable, but the trading language you use internally and externally is the key, it shifts behaviour!
So the journey continues! Onwards now and let us get to grips with the term, ‘Trading Grades.’ Why grading your trades emotionally and from a technical perspective is important.
9 & 10. Trading Grades:
So let’s start with the WHY; why grade your trades from a technical standpoint and why you should grade trades based on ’emotional regulation,’ how emotionally you were associated to each trade.
- What’s a Trader’s No. 1 WHY? Is it that all Day Traders seek to constantly improve their game? Is this the No. 1 WHY? Or is their dominant WHY to make money? Money is just a by-product of the process and it’s an external motivator. External motivators are never as powerful as intrinsic motivators in the long run. A good why, but not the BIG WHY. So it must be improvement then? Seeking to constantly evolve and advance as a trader. You would think this is their No.1 WHY. It’s a better WHY, (If this is your belief; and we all trade our beliefs) but still it’s not the BIG WHY if you have really taken time to think about this conundrum. Constant improvement is always in the trader’s periphery, it’s an integral chromosome that keeps him / her functioning at peak levels; but all professional traders seek a BIGGER WHY; one that’s chained to their trading plan. It’s not improvement we all seek; it’s CONTROL! Let me explain…..
ALL trading plans follow rules. Trading your ‘A’ game means;
“Taking A Trade Inline With Your Rules.”
“Whenever You Put On A Trade,
You Must Have Two Goals.
The First, Of Course,
Is To Make Money.
The Second Is To Become
A Better Trader.”
Taken From Chapter 3 of His Book;
The New Sell and Sell Short: How To Take Profits, Cut Losses, and Benefit From Price Declines.
Whether you book a profit, make a loss or scratch the trade, a professional trader always seeks to trade 100% in-line with their constructed trading rule set, derived from their trading plan.
So it’s trading plan 1st then administrating its associated rule set that allows a trader to have something to gauge with. Without a defined set of rules for entering, holding and exiting a trade you won’t be able to objectively grade your performance from a technical level and from a perspective focusing on how you ‘behaved.’ Traders need to be emotionally regulated, aiming for high degrees of emotional intelligence and self-control.
HAVING TRADING RULES MEANS YOU HAVE THE BASIS TO OBJECTIVELY GRADE YOUR TRADES.
That’s great, and we all kind of know this cognitively already, but how does our TRADING PLAN and TRADING RULES connect to and tie in with a trader’s BIG WHY?
The BIG ‘Why’ professional trader’s trade is derived by answering 1 very simple question.
“Can I trade 100% Inline With My Plan
And Rules On The Next Trade I Take?”
The reason my most trades fail is they simply can’t adhere to the above question!
If a Trader takes 10 trades in 1 day and can say with complete honesty and certainty that he / she traded 100% exactly to their plan and adhered 100% to their rules for all 10 trades then he / she would have answered many questions, and answered their BIG WHY!
Questions like: “Am I a disciplined trader?”
Answer: “I am a disciplined Trader.”
Question: “Am I an honest trader?”
Answer: “I am a Honest Trader.”
Question: “Am I a fearless trader?”
Answer: “I trade with no fear, only respect for the market.”
Then The BIG WHY Question
“Am I totally in control of everything I can control?”
The Big Answer: “I AM ALWAYS IN CONTROL!”
WHY?….. And this is important……….
“BECAUSE I ALWAYS FOLLOW MY PLAN
AND TRADE TO MY RULES!”
A true ‘Super Trader’ needs to be in control of him / herself the moment he / she enters his or her trading room. Any past issues, cognitive biases, fears and doubts that plaque most traders have ALL been dealt with. Why? Because he /she has taken the time to overcome all obstacles that stand in the way of BEING IN CONTROL. They’ve done the work! Subconscious negative self-talk never can pass a ‘Super Trader’s conscious awareness. Why? Because they’ve learned to control all their internal pessimistic narrative, detrimental questions that emanate from their cynical chattering internal voice.
So the BIG QUESTION is; “Who Is In Control?
The BIG Answer: “I AM ALWAYS IN CONTROL!”
That’s the real reason why; why traders really trade. It’s because they all seek CONTROL in their trading and in their life! It’s self-mastery.
- This incurs being PROCESS ORIENTED. You’re not focused too much on the result ‘per se,’ you’re judging your trades based on decisions you made. So this is a RULE DRIVEN process. “Did I stick to my rules, or did I break my rules.”
- By quantifying your trading decisions within a grading system you’ll be able to compare differences, characteristics, view variations and distinctions that will elicit knowledge to improve and reduce fluctuations and swings in your equity growth. So a consistent process can potentially lead to consistent improvements; if you are of course disciplined enough to stick to your trading plan and rules.
(Trading psychology plays a key role in acquiring desirable results).
Instilling a ‘DAILY PRACTICE’ of trade by trade assessment means that you take a disciplined approach. This creates a character trait that paints an ‘identity,’ an image of self for your own minds eye to see.
How you see yourself as a trader is important.
‘Your behaviours shape and build your confidence.’ Again; this is important. It’s your actions that will literally change who you are as a trader and as a person. This isn’t just some rhetoric to be glossed over. How you regard and judge yourself as a trader is highly fluid. Your perceived trading identity can radically change as you change your behaviours.
Scientific research shows it’s your behaviours you impose in the now that shapes your confidence in the future and NOT confidence that shapes your behaviour as many people have previously been led to believe.
This is known as ‘Self Signaling.’
All Super Traders Understand The Psychology Behind Self-Signaling.
“If Your Trading Behaviours Effect How You See Yourself, Then How You Act & Execute Daily Trades Can Have A Tremendous Effect On Your Self-Image.
YOUR CURRENT (TRADING) SELF IS INFLUENCED
BY THE ACTIONS Of PAST (TRADER) SELVES!” – DowBoy
For new day traders coming into this business it’s an important concept to grasp. You identify yourself with behaviours. If you trade with a calm demeanour you identify yourself as a calm rational trader. If you trade always within your pre-determined position size model, then you see yourself as a trader that always takes calculated risk and sticks to his plan; a disciplined trader.
This brings in another psychological concept; 1 of ‘PRECOGNITION.’
The rationale behind this means your thoughts don’t necessarily lead to behaviours. With that being said, it’s important to know that your behaviours CAN lead to thoughts. With modern science going ‘Quantum,’ and vast amounts of study and research within the realms of thought and behaviours we must conclude that our inner World does shape and create our outer World. So it seems that Steven Covey’s ‘Habit No.2‘ principle holds true;
“Mental Creation Precedes Physical Creation.”
But even with the above principle holding truth; our BEHAVIOURS and ENVIRONMENTS that can also create internal states of being.
“What precognition shows is that you can actually PREDICT your inner state by behaving in certain ways, and by placing yourself in certain environments. Thus, change doesn’t only happen from the inside out, but also from the outside in.”
– Benjamin P. Hardy
“HOW YOU TRADED AND DISCIPLINED YOURSELF
YESTERDAY PROVIDES SOME VERY POWERFUL
AND INFLUENCIAL EVIDENCE.
NOW YOUR MIND IS ‘PRIMED’ TO CONDITION YOUR BODY TO ACT AND BEHAVE THE FOLLOWING TRADING DAY, BASED ON THIS EXPECTATION, i.e. ‘SIGNALS’ FROM YOUR PAST SELF THAT ARE INDEED VERY PURSUASIVE!” – Dow Boy
To Summarise Self-Signaling and Precognition;
Your trading identity FOLLOWS your behaviours. This is important as if you can change your behaviours you neurologically change your identity and radically change how you view yourself. Thus you instigate a self-fulfilling prophecy, a recursive model for positive change.
So within the context of grading trades technically and emotionally, you instil a regime of disciplined consistent actions in record keeping that elicit behaviours that prime your inner world to ‘see yourself,’ identify you as a trader that is destined to become a greater version of self; trading as a super trader does.
So enough about the whys, control and trading psychology. Let’s move onto the how.
HOW TO GRADE YOUR TRADES:
In the ‘Day Trader Orders Sheet’ there is a tab labelled ‘Grading Codes.’ This holds ‘codes;’ ‘trackers’ that you can use to assign to your trading notes section for EQ Grades, and T/A Grades.
As an example; if you took a trade and traded it perfectly; IE 100% to your rules and plan and it booked a nice profit, you might be inclined to use some ‘Emotional Codes’ from this sheet such as;
PER19 (Focused), PE28 (Present), PE21 (In Flow); and some Technical Codes such as EN10 for your entry, EX10 for your exit, PS 10 for position sizing.
This sheet is just a guide. Add / remove / adjust codes as you see fit.
In a short period of time you’ll associate the codes with their corresponding meanings without having to reference them within this sheet.
Another advantage of using grading codes is that (over time) you can enter all codes into another spreadsheet, and look for patterns, recurring emotions that seem to dominate you as a trader. This is extremely valuable information as you’ll be able to focus in on possible negative emotions that seem to keep popping up, and deal with them in a professional manner. But 1st you need to know what emotions do reappear on a regular basis, so you need to track them.
This leads to greater insights. As you’ll be tracking your ‘Entry Strategy’ as well, you’ll be able to look for patterns that drill into the ‘Type’ of trade you placed. Maybe a certain emotion repeats itself in relation to a ‘Channel’ Trade (ENS4), but only in ‘Bull Quiet’ (MTBQ) market types. This again is powerful insight as this might lead you to alter your strategy for ‘ENS4’ trades, or even not to enter trades on instruments that have a market behaviour that seems to be associated with ‘Bull Quiet’ markets.
There are always lessons to be learned here. Your experiences are quite often fleeting moments in time during your trading hrs and using grading codes to solidify your memories and turn them into actionable lessons will evolve you as a trader. Documentation, record keeping are crucial aspects, tools designed to enhance a day trader’s performance. Turning this into a daily routine will deliver many surprises over time that can certainly reveal ways to improve your trading performance, boost your memory retention and assist in pushing your equity curve in the direction and slope that you so desire.
“As a Trader, You’ll Certainly Make Mistakes & That’s Fine.
But Repeating Mistakes Is The Thorn
That Will Eventually Bleed Your Account Dry!
Log Your Trades. Record & Document Your Trades.
These Are Your Plasters To Stop Your Bleeds, Heal Your Wounds & Physically Rejuvenate Your Trading Scars & Distress.
It’s OK To Bruise, But Don’t Bleed!
Breathe New Life Back Into Your Trading.
Document Your Trades!” – DowBoy
So just remember that the trade never ends when you exit your position on your trading platform, there’s still lot’s to do. Grading trades, taking notes in a diary form of notation and screen capturing IS part of the trade for professional traders.
Grading Entries and Exits. A simple way to get a ‘quality score’ for your entry /exit or overall trade is to use either swing highs and lows, high of the day, low of the day and utilize channels drawn around price to reflect and gauge your trade performance.
A couple of seasoned professional traders spring to mind here that evangelize and implement this trading philosophy.
Dr. Alexander Elder explains these very well in his book;
‘The New Sell & Sell Short.’ Chapter 3, On Keeping Records,
(‘How To Grade Your Performance).
As a quick example, if you were a swing trader and wanted to grade your entry, you’d compare it against the day’s range. So obviously you would be looking to buy as close to the day’s LOW as possible, and vice versa for selling. So the formula would be;
BUY GRADE = the high of the day minus your buy price
the high of the day minus the low of the day
The result from this calculation is a percentage. So if you bought at the low of the day, your grade would be 100%, and if you bought at the top tick, your grade is 0. Elder recommends grades below 20% being that of poor, above 50% is a good trade grade, and above 80% superb in the ‘Technical Trading’ Department. See an example of this in a screenshot taken from one of his spreadsheets.
Another trading bellwether with many years of trading experience is Mr. Thomas N. Bulkowski.
He is one of the World’s leading experts on chart patterns and has a wonder website which holds many golden nuggets which can be found here; pattersite.com
The reason I mention Mr. Bulkowski in this section of my trading post is that many years ago he had designed (with help) a very nice trading spreadsheet that really caught my eye and that was quite original in its layout. It’s heavily focused on grading trades, hence the mention here. It’s evolved over the years, being a bit more ‘busy’ than it was when it originally became available on his website. Please see the screenshot below depicting its current iteration:
This is available for free at his website. You can download the above trading spreadsheet from the following link: patternsite.com-spreadsheet
I encourage you to take a look as it’s another take on grading trades in excel and might offer some deeper insights into how you’ll want to approach and incorporate your own trade grading system.
Instructions appear on the spreadsheet.
The spreadsheet can tell many metrics including the following;
- Whether you are entering trades too early, on time, or too late;
- Whether you are exiting trades too early, on time, or too late;
- Whether entries too late result in a loss — trades you should skip.
Worth spending some time with; and bookmarking Bulkowski’s website. Tom deals in probabilities. He has written several books on trading over the years including the authoritative classic;
‘Encyclopedia of Chart Patterns.’ This is definitely worth a mention here and should be on every professional traders bookshelf.
Just to finish off this section on Trade Notes and grading your trades.
Notice I included the following next to the TRADE NOTES heading;
Include Objectives, Initial Trade Signal (What Was My Edge?)
Do try to write and focus more energy on the positive aspects relating to each trade. You really must have the 80/20 Pareto principle galvanised on top of your cerebral cortex! Remember the Late Mark Douglas’s (1990) famous book title?
The Discipline Trader
This was one of the first books to make trading psychology mainstream. Mark discussed many aspects that related to memories and trader’s beliefs. It’s important to research and understand thyself as trading is predominantly an inner game. Of course you need to stop doing the wrong things, but if you aren’t mentally well organized; if your subjective and rational mind’s constitution isn’t set with a high ‘locus of control‘ skewed towards positive outcomes over time, then a ‘personal financial crash’ is knocking on your trading room’s door.
I did say above ‘Try To Focus On The Positives.’ That’s not to say stop working on reducing errors and overcoming self-sabotaging thoughts and feelings. But you must be diligent in channelling your energy and time along the path that shines the brightest light!