Tag Archives: Journals

The Good, The Bad and The Ugly!

 

Here is another way to track and review trades… with a classification system that makes it a little bit of fun!

During your post-session review you classify them into one of three categories:

  • The Good – Trade ideas which DID have edge and were well managed.
  • The Bad – Trade ideas which DID have edge but were either poorly entered or poorly managed.
  • The Ugly – Trade ideas which DID NOT have edge.

 

Some clarification:

  1. "Trade ideas which DID have edge" – I need to do some more work on teaching this in the future. For now, consider them to be trades in which your hindsight review says, "Yes, taking this trade was the right decision". This does not necessarily mean it profited. You might have taken a loss. But without any doubt, it meets all your trading plan criteria and it's one you were right to have taken.
  2. "Trade ideas which DID NOT have edge" – Those trades which are clearly not a part of your trading plan. You had no right to be in that trade. This doesn't mean it lost. It may well have profited, but was still a poor trade (for example… a revenge trade that works!).
  3. Feel free to vary the definitions in any way that makes more sense to you. But keep them in three classifications – The Good, The Bad and The Ugly!

 

Our aim is to seek constant improvement in our stats. When analysing the stats associated with larger groups of trades (20 minimum), we look for the following:

  • The Good – We want more of these. Always be aiming to increase the percentage of The Good within any sample of trades. And to increase the profit they provide.
  • The Bad – We want less of these. Always be aiming to decrease the percentage of The Bad within any sample of trades. And to reduce the damage they do to P&L.
  • The Ugly – Ideally, we aim for NONE of these. That might be tough. But it's the goal.

 

It's a continual striving for improvement in skill and expertise.

And of course we drive our performance improvement through an effective review process:

The Good:

  • How can I ensure I take more of these in future? What signs were there pre-trade to suggest this could be one of The Good? Consider both the market structure and the way that price was moving.
  • How could I have have performed even better? Was there any way to have increased size (assuming you scale in and out)? Was there any time or place at which I could have added to the position? Was there reason to extend the targets even further?
  • Were there any non-technical factors present which may have assisted with my decision making? How was my physical state? How was my mental state? How was my emotional state? How was my trading environment?

 

The Bad:

  • In what way did I underperform with this trade?
  • Why did this occur?

  • How can I ensure I do less of this in future?
  • Were there any non-technical factors present which impacted upon my decision making? How was my physical state? How was my mental state? How was my emotional state? How was my trading environment?

 

The Ugly:

  • How can I ensure I avoid these trades in future? What signs were there pre-trade to suggest this WAS NOT A VALID TRADE? Consider both the market structure and the way that price was moving.
  • Why was I not aware of this at the time?
  • Were there any non-technical factors present which may have assisted with my decision making? How was my physical state? How was my mental state? How was my emotional state? How was my trading environment?

 

The Good

The Good

The Good

The Good

The Good

The Good

The Good

The Good

The Good

So… given that it's now closer to 4:30am… how about we come back next week with part two. We'll look at the earlier trade from this same sequence (The Bad). And I'll see if I can find you one of The Ugly ones as well.

Happy trading,

Lance Beggs

 


 

Review and Improve

 

You might like to consider your review process as the vehicle which drives your trading business to its ultimate destination.

Whether that destination is ongoing improvement and eventual success… or continued mediocrity, frustration and failure… is completely up to you.

If you've got nothing in place, here is a simple process to get you started.

Once you're comfortable with this, there is great scope to expand it to new areas of review. It doesn't solve everything.

But again, if you've got nothing in place, consider implementing this process RIGHT NOW.

Review and Improve

Look at your last 20 trades. Study them with the benefit of hindsight.

Examine 50 if you prefer. Or 100. Find the right compromise for sample size, which is large enough to be statistically significant and small enough to ensure your review process occurs on a regular basis. But not less than 20. I would suggest that is the absolutely minimum.

Once you've gathered all the trade data and charts, let's check the quality of the setups.

How many of your trade ideas were in chart areas which DID offer potential for multiple-R profits (2R minimum)?

It doesn't matter whether you actually managed to profit, or not.

We're checking the general concept. The trade idea.

We're making sure you're trading in the right areas of the chart.

Did price move from the setup area a sufficient distance to provide multiple-R returns?

Take note of all the trades within the sample which achieved this goal. And now let's check the quality of trade entry.

Now consider those trades that were in good multiple-R setup areas. How many were you able to enter at a place and time which offered good potential to catch those multiple-R profits?

Again, it doesn't matter if you achieved a profit or a loss.

With the benefit of hindsight, given where you entered, is it reasonable to expect that a successful trader could manage that position to achieve multiple-R profits?

How many of these trades would you classify as having a good entry?

Take note of them… and let's move on to check the trade management.

Now consider those trades that were in good setup areas and which were entered well. How many of these were successfully held from entry to the first target level?

How many were you able to hold open to the initial target point, avoiding all temptation to scratch the position early?

And then…

Of those which did achieve the initial target, how many of these were held to a further "hindsight perfect" exit point?

Again, take note of how many achieved this aim.

And now let's use this information to drive our business forward.

Looking at these figures, which area do you need to improve when trading the next sample?

It's important that we focus on one area at a time.

And that we work in order.

Get the setups right first. Are you happy with the number of trade ideas that are actually providing multiple-R profit potential? If not… focus on improving the quality of your trade ideas.

Then work on entry.

Then initial management.

And then ongoing management.

Find the first area that disappoints you. Examine why. Determine a course of action for the next 20 trade sample.

And repeat.

Happy trading,

Lance Beggs

 


 

Finding The Places Other Traders Got It Really Wrong

 

I really like this statement from last week's article, where we discussed how I use "the other trader" to identify good trade opportunity.

  • If I can't feel someone on the other side of the trade getting it really wrong, there is no trade.

Step one in implementing this idea into your trading, is to learn to find these areas where "the other trader" might have got it really wrong, with the benefit of hindsight.

And to achieve that, I recommend you use one of my old favourites – your Market Structure & Price Action Journal.

Let's add a new category to our journal entries – "Places Other Traders Got It Really Wrong".

Print your trading timeframe chart. Cover it with notes. File it. And review it often.

You don't have to find every single occurrence.. Just the obvious ones which really stand out to you. Anything which immediately screams out to you, "that was a dumb place to trade!!!"

Here's an example covering the first hour and a half of the most recent session.

(Click on the image to open a full-size version in your browser)

Finding the places other traders got it really wrong

What if you did this every session for the next few months?

Could the potential improvement in your edge more than justify the five minutes it may take each day?

What are you waiting for?

Happy trading,

Lance Beggs

 

PS. It's important to note that in trading like this I rarely enter via a limit order placed ahead of time in the area of interest. My personal preference is to let price enter the area where I think other's might have got it wrong. And then watch to confirm the behaviour. Ideally I'll see some sort of stall or exhaustion, indicating a failure to continue further in this direction. That's my cue to enter. Sometimes it comes VERY quickly. Other times it provides a nice stall structure which allows entry as it breaks. With experience you'll know whether it has potential to snap back quickly or not. First step though… learn to see them with hindsight. So get started on your Market Structure & Price Action Journal.

 


 

What If You Did This Every Day?

 

The following image was posted on YTC Social Media on Tuesday… and I think it makes such an important point that I want to expand upon it in today's article.

First… here's the image:

What if you did this every day?

All trading conditions are NOT equal.

Sometimes the environment is well suited to your trading strategy, your style and your personality.

Other times it is clearly not suited.

What difference could it make to your results, if you were to start each session with a game plan. Something like this, for example:

What if you did this every day?

As always, the game plan is subject to change during the session. But it's a useful starting place.

It will have you ready to engage the market without hesitation, should price move into areas with potential for ideal trading conditions.

And it will have you operating cautiously at all other times.

But how do you learn to identify these areas?

This is a good goal for your Market Structure & Price Action Journal!

What if you did this every day…

What if you added a short task to your session review procedure? Just a couple of minutes to review the higher timeframe and trading timeframe charts.

What if you identified the areas on the charts which provided ideal trading conditions? The price action with clear directional conviction, smooth flow and ideal pace (or whatever other conditions you prefer). Just the absolute BEST!

What if you studied the market structure, noting on the chart the features or conditions that led to creating this ideal environment. Typically these might be areas that spring an HTF trap, or areas of significant breakout.

What if you studied the price action, noting how to best exploit the trade opportunity to maximise profits while minimising any risk.

What if you printed the charts, along with your market structure and price action notes, and filed it into a ring binder or folder?

What if… after doing this for a year… you realised that you had a document with maybe a hundred or so examples of ideal trading conditions, along with notes on how to identify them, and how to exploit them once they're confirmed.  (Yes there are well over 200 sessions a year, but not every session will provide an area of "ideal" trading conditions!)

What if you used this resource to document some rules-of-thumb for identifying potential areas of ideal conditions, allowing you to commence each session with a game plan just like the example listed above?

Would that perhaps be useful?

Let's look at another example using the same market as in the above image, but from the very next day.

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Market Structure and Price Action Journal Categories

 

I've long been an advocate of the importance of a Market Structure and Price Action Journal. There is no shortage of material on this topic if you want to search the YTC article archives. The best place to start might be with anything tagged "journals", which you'll find here.

So I'm pleased to have received this email question from a YTC reader.

  • "Sir, I have started a market structure journal but would be most grateful for some suggestion for topics or categories for journal entries."

 

No problems at all.  🙂

Some people prefer to make their journals completely free-form. That is, no categories at all. Just finding one item of interest each trading day and studying it in depth. That's great.

Others will prefer to pick a topic or two for intense study. Each day they'll find and study a market structure or price action sequence related to that topic. This will allow for quicker discovery of "rules of thumb" regarding how to identify and manage these particular market structure features or price action sequences. And when you're "done"… move on to a new category.

Just pick whichever approach you want. There is no right or wrong.

Ok… so the email question assumes you've chosen the second approach and want to focus on one particular category of journal entry at a time.

What should you chose?

Again, there is no right or wrong. Just make sure it's something relevant to your own approach to trading.

But let's list some categories to help you get started if you're new to journaling. Or if you already have a journal underway, perhaps the list will help you identify a new area for future exploration.

Support & Resistance Structure

This is the obvious starting point – the S/R Structure. Print examples and study them in detail. What makes a good level? When do they lose relevance? How does price interact with the level?

  • Level Definition – Which Levels Remain Valid For Further Touches?
  • Level Definition – When Do Levels Lose Relevance?
  • Resistance – Successful Break
  • Resistance – Failed Break
  • Resistance – Tested But Not Broken
  • Resistance – Becomes Support
  • Support – Successful Break
  • Support – Failed Break
  • Support – Tested But Not Broken
  • Support – Becomes Resistance

 

Specific Key Levels

You may wish to expand upon the basic S/R structure and study some specific levels in a little more detail.

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Build a Visual Library of MUST-TRADE Scenarios

 

We've spoken in NUMEROUS articles about the importance of using a journal to study key market structure and price action sequences, with the aim of developing your ability to perceive and understand the current strength or weakness of price movement and project that forward to develop a bias for the near future.

Here are some articles on this topic if you missed it all:

 

That's a quick list from the top of my head. But there are likely more if you want to search through the archives (http://yourtradingcoach.com/site-map/). Perhaps try the Tag List on the right hand side, or the search box at the top right.

Equally as important though is a Trades Journal, studying the best trade sequences of the day whether you took them or not, with the aim of developing your ability to perceive, understand and exploit trade opportunity when it presents in the markets.

I know… I ask a lot of you!

But I really believe it's of GREAT benefit to your trading business. Every trading session – one entry in your Market Structure / Price Action Journal. And one in your Trades Journal.

Trading is a skill-based & performance-based activity.

How do you develop skill?

How do you improve performance?

By studying best-practice! Whether you traded it or not!

What was the best trade opportunity of the session? If you did see it at the time, what did you do well and how could you do it even better? What did you do poorly and how could you improve next time? And if you didn't see it, what clues did the market provide that this was a Must-Trade scenario.

If you don't have a Trades Journal, get started today. Open up your charts to the prior session and find that day's Trade of the Day! Print it out. Study it. Cover it in notes. And file it.

Here's a few to get you started… all from last Friday's session… all of which I consider Must-Trade scenarios.

Click on the images to open larger copies in your browser! Or see the links below the images to download a copy to your computer!

trades journal - sample 1

 

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Why Do We Create and Regularly Review our Market Structure and Price Action Journal?

 

Last Sunday I shared the following image on YTC Facebook and Twitter.

It's such a beautiful example of the benefits of journaling, I just had to expand upon this in a newsletter article.

From YTC Facebook and YTC Twitter - why we create a Market Structure and Price Action Journal

Here's the thing…

Finding and exploiting market opportunity

Ok, I know!

The markets don't always back up the very next day with a repeat of key price sequences.

The real benefit builds over time. As you populate your journal with more and more examples of key price action sequences (and ensure regular reviews) you will come to see repeated patterns or themes within the data.

Some of these patterns or themes lead to documented improvements to your trading plan.

But most are simply internalised, improving your situational awareness as real-time data unfolds in future trading sessions. You have improved your ability to perceive shifts in the supply/demand dynamics of the market. You have improved your ability to understand what that shift means in terms of risk and opportunity in the near future. And you have improved your ability to exploit that opportunity for profits (or minor losses when wrong).

Similar benefits apply when journaling market structure features, in particular the points of transition from one environment to another.

There was another recent article related to the topic of journaling, in which we discussed the journal-identified hypothesis that "A Day After a Monster Trend Day, which shows no follow through overnight and a weak open, is likely to remain rangebound within prior session S/R levels". You can see the article here if you missed it: http://yourtradingcoach.com/trading-business/day-after-monster-trend-day/

This article attracted the following comment:

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The Path to Increased Understanding of Price Action and Market Structure

 

An expert level understanding of price action and market structure will not come through books.

It comes through experience in the live markets!

It comes through direct observation!

And it comes through questioning anything new or unusual you see in the charts.

The Path to Increased Understanding of Price Action and Market Structure

 

Kind of like the Scientific Method!

And exactly the process we've been suggesting for effective use of your Market Structure Journal.

Let's look at a couple of examples from the last week:

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Day After Monster Trend Day

 

For the last seven years I've been highly recommending traders keep a Market Structure Journal for recording and studying any interesting market structure and price action observations.

In my opinion this will become the greatest book in your trading library, by a long margin. Certainly the most valuable in terms of quality content.

Every day… find something of interest in the charts. Print it out, study it and add notes. File it in your journal. And review it often.

Usually traders will produce their journal in one of two ways.

(1) Based upon themes. Choose a theme for the current month, such as: "This month I will study the price action which forms the low of the day for clues that may have alerted me to this being a significant low." Then next month, replace it with another theme.

(2) Completely freeform. Simply focus on whatever stands out the most from the current session. For example, "Today's climactic exhaustion into prior resistance is amazing. Let's study that; and in particular that opportunity to fade the move on the weaker retest of the highs".

Today's article fits more in the "completely freeform" category in that it's based upon something that stood out in the markets.

But with a slight twist.

Instead of focusing on the feature of interest (a monster trend day), I thought it would be a good idea to look at what follows it (the day after a monster trend day).

While there is value in studying a price action sequence which stood out during a session, there is also exceptional value in studying what comes after it.

One example (such as provided here) cannot give a complete and accurate picture about "how to trade the day after a monster trend day". At best, it may provide us with a hypothesis which can be explored as further examples are found in future trading sessions. Over time our Market Structure Journal will be populated by other similar occurrences. And as we get 20+ examples of "day after monster trend day" we'll start to see some common features that allow us to establish some "rules of thumb" for extracting profits from these days.

Last Friday's Crude Oil session provided a monster trend day.

Let's start by looking at the daily and 30 minute charts to get an idea of what happened that day.

Day After Trend Day

Day After Trend Day - 30 min perspective

Certainly this day was worthy of it's own journal entry.

But let's check out what followed. Because while we might not be able to recognise a monster trend till part-way through the session, we will always know when we're about to commence trading a "day after monster trend day".

So it will be very handy to have some "rules of thumb" in place for what to expect following a monster trend day, if that is at all possible.

Let's examine this one occurrence, from Monday 1st June, and see if we can find anything interesting.

We'll use a combination of both 30 and 5 min charts, simply because they fit the required data into my article image sizes. In producing your own journal entries you will typically use your higher timeframe (or higher) for structural analysis and the trading timeframe for price action analysis.

Let's look first to see what immediately followed the monster trend day. Did it produce any significant follow-through in the overnight data?

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Do This to Increase Learning Every Session

 

Every session… find at least one price action or market structure feature that you find interesting… and STUDY it.

I posted the following images to YTC Facebook and YTC Twitter recently:

Wide Range Bars with No Follow Through

Wide Range Bars with No Follow Through

Yes, you're lacking some context in examining the above trade (there is limited room on a facebook image). But the main point is not the trade itself, but rather the idea of identifying and studying one price action or market structure feature EVERY DAY.

If you do this after every trading session, you'll have well over 200 entries in your journal in twelve months time. How valuable will that be!

What REALLY pleased me was that a couple of days after the original post, I received the following comment from YTC reader Naveen:

 

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