| GROUND LEVEL INSIGHTS
The Importance of Tracking Your Trades
Hi, Stephen Ground here, your brand new ProsperityPub Editor-in-Chief.
Earlier this week, we re-launched ProsperityPub with a renewed focus on making trading accessible and actionable for everyone. If you missed my intro note, you can read it here.
Today, I want to discuss an important, but often forgotten part of trading:
Tracking your trades.
I know, I know — paperwork. No one loves it, but it’s absolutely essential… and not just for beginners!
Tracking your trades can mean the difference between making money and just thinking you’re making money.
Because all traders — not just beginners — tend to have a bias towards remembering the big wins and diminishing the losses.
And that can be absolutely fatal when it comes to trading.
Plus, if you really want to get exact, let’s not forget the need to track commissions and fees.
Many brokers these days will let you trade stocks for free, but there are still fees for trading options. It’s not much, but if you really want to track how profitable you are, you’ll want to include it in the cost of your trades.
Now, creating a tracking sheet might seem like an overwhelming task. And if you want to really get fancy, it certainly can become a huge project.
But if you just want to track the basics, you should only need about X columns.
Here are the details I would track:
| | • | | Ticker Symbol / Option | | | • | | Quantity | | | • | | Entry Date & Time | | | • | | Entry Price | | | • | | Exit Date & Time | | | • | | Exit Price | | | • | | % gain / loss | | | • | | $ gain / loss | | | • | | Notes |
There you have it! If you’re handy with Microsoft Excel, Google Sheets or any other spreadsheet software, you can go create a sheet for yourself to keep track of your trades.
You could even set up a few fields to do simple math so you can automatically get statistics like percentage of winning/losing trades, win rate, average holding period and more…
Now, I do want to point out the “Notes” field, because most traders will be happy just placing trades, tracking the numbers and then forget about this ever important “Notes” field.
Many of our trading experts have talked about the importance of keeping a “trading journal”, especially in the beginning stages of trading.
And this Notes field can act as a trading journal.
Now, a trading journal is not just for beginners. It’s a good way for traders of all experience levels to save details about the trades they take so they can go back and analyze their behavior in the future.
Did you ever learn a new skill, get good at it and then go back and look at your work from your “early days”? Whether it’s painting or writing or wood carving or riding a bike, it can be downright embarrassing sometimes to look back and see where you came from.
But that’s how growth works.
And keeping good notes about our trades can help us see how we’ve developed as traders, where we’ve made mistakes and where we’ve made particularly good decisions.
Because once a trade is a week or a month — never mind years — in the rear view mirror, you’re going to completely forget simple things like:
| | • | | What the market conditions were like | | | • | | What you were thinking that made you get into the trade | | | • | | If something on the chart jumped out at you | | | • | | What thoughts, ideas and doubts you were having about the trade | | | • | | What your exit plan was if the trade didn’t go as planned |
Details like this (and more) are important for us to develop as traders.
I hope I’ve shown you the value of keeping a sheet that documents your trades and acts as a “trading journal”.
But I know it can seem overwhelming, so I’m going to do something special.
If you click here to join our FREE Prosperity Pub channel, I’ll be posting a Google Sheet later this week that you can copy and use as is, or modify it for your needs.
Looking forward to seeing you thrive,
— Stephen Ground | | | | |
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