Monitoring trading performance from "summary" of The Art of Trading by Ref Wayne
Monitoring your trading performance is key to succeeding in financial markets. It requires tracking your trades, understanding the patterns of your successes and failures, and making adjustments to improve results. Having an effective strategy for keeping track of your performance is essential for long-term success in trading.- Contentment is important when monitoring trading performance, it is key to remember to not make trades out of action bias - reacting impulsively without checking the facts. Instead, take your time and review all of the relevant data before making decisions - allowing you to go into the trade with the confidence that you are making an informed choice.
- Strict risk management is essential when monitoring trading performance. Having set criteria around positions size, frequency and exposure time can restrict losses should markets move in unfavorable directions. Trading during stable times, rather than emotional highs and lows, also allows for better decision making based on clear thinking.
- Charting is a great way to measure performance as the data can reveal patterns and key trends which help to inform decision making and provide clarity. Analyzing charts more than once per day helps to stay aware of any developments and gives an idea of the amount of profit or loss made at various times throughout the trading day.
- To maximize trading performance, one must constantly monitor their investment portfolio and keep track of changes in market trends. Keeping a close eye on current events and news can offer valuable insights into future movement that could be beneficial for performance.
- Having a mental trading plan is also advantageous - this means having a desired outcome before entering the trade, whether that’s aiming for a certain percentage profit, or setting a stop/loss to minimize damage. With concrete goals in mind, one can remain focused on achieving them, rather than become distracted by short-term fluctuations in the markets.
- Keeping a journal is useful when assessing trading performance. This includes details of profits and losses, along with notes about the environment when the trade occurred. Reviewing the past can foster learning from mistakes and reiterates successes, creating a narrative that can prepare individuals for future trading days.
