Monthly Archives: September 2010

I’d like to share an email provided by a YTC-newsletter reader, Alex, in response to the recent article on post-session analysis. In this email, Alex presents a method he used to improve his trading through effective post-session analysis and review. All effective review involves (in my opinion) some form of comparison of actual performance with hindsight performance. Alex offers a great technique for achieving this aim.

Thanks Alex… Great stuff.

Email extract…

I would like to share an element of post-session analysis which I came up with by accident (many good things happen that way, e.g. 3M sticky notes 😉

I am usually printing out unmarked candlestick charts at the end of the day, cover them with a blank sheet, and uncover bar by bar, marking my analysis and entries. I would then mark my trade management decisions too (moving SL and taking (partial) exits or making add-ons to the position. One day I printed, by mistake, 3 copies of the same chart. I used one for the analysis on that day; the other two copies were left on the table. A few days later, I printed "fresh" (then current) charts out and put them on the table on top of those extra "leftover" copies from a few days earlier.

I then started doing my bar-by-bar analysis, and at the end of it thought that some charts looked familiar. It was then that I realized that there were some old charts in that batch. Out of curiosity, I compared freshly marked chart with my analysis of the same chart which I made a few days earlier. I was surprised to see that only a half of the setups on both charts were "overlapping" (i.e. were marked in the same way). That made me think.

I started doing that as a deliberate exercise: print out 2-3 copies of a chart, do analysis on that day and keep the other copies for a few days, then analyze them again. Gradually, I realized that I can consistently mark certain types of setups. I decided to focus more on those setups as the ones I could recognize better. Gradually, I increased consistency of my analysis to about 70%. During that exercise, the most consistent setups were distilled and my trading is now centered around them.

With that trick my thought was (still is) – if I cannot achieve at least 70-75% consistency with identifying setups during a bar-by-bar analysis on a printed chart, how can I get it right with all the pressure of live trading.

Another trick to share: I grab a snapshot of each setup live (I use http://www.techsmith.com/jing/) to be able to review it at a "face value" – when you review trades post factum seeing how things indeed developed, it’s hard not to allow the "hindsight bias" to cloud your analysis. i.e. sometimes a setup looks bad with a hindsight, but makes perfect sense when taken – even great setups do fail from time to time.

 I operate my trading business in accordance with my Procedures Manual, which documents the procedural steps I will carry out in order to complete:

• My pre-session routine

• My during-session routine

• My post-session routine

• My contingency management procedures

We discussed the pre-session routine in a previous article – https://yourtradingcoach.com/trading-business/my-pre-session-routine/

In this article, I’d like to discuss my post-session routine. Feel free to use whatever parts you find useful for documenting your own routine. Feedback is always welcome. I love to hear how others manage their trading as well (through co-operation we can all improve as traders).

Post-session involves any trading work done after completion of the days trading session. This involves two main components:

1. Immediately After

2. Before Bed

Immediately After: (with additional comments or links in italics when clarification is required)

1. Relaxation and Breathing Session (quick – 2 to 3 minutes max)

2. Administration (approx 5 mins)

   1. Export transactions from broker

   2. Confirm my trade log matches the broker’s transactions

   3. Complete any post-session trading log and spreadsheet entries (usually little to do here, as this is completed during session when time is available)

   4. Print charts and mark the trades (usually completed during session, if it allows time)

   5. Review P&L

   6. Update calendar with Green/Red profit or loss indicator

3. Trading Session Review (approx 45 mins+; document any significant findings in the Trading Log under the heading TS Review)
   

   1. Market Environment Review

      1. With hindsight, how would you define the market environment?

      2. How successful were you in identifying the market environment during the trading session?

      3. What signs were present to indicate this environment?

      4. What key pattern features were present and how could they have been used to identify the market trend and bias?

      5. Step manually through the chart bar by bar, or use a market replay feature to step through the chart at high speed, observing the market environment and the signals that identify that environment, trend and bias.

      6. Print the chart and add appropriate notes to your Market Structure Journal. 

   2. Trades Taken

      1. With the benefit of hindsight, was your trade based on a valid setup for that market environment?

      2. If this was a valid trade:

         1. Review the signals that led you to identify the trade opportunity?

         2. What was the ideal entry point? How does that compare to your entry? What signals (if any) did the market provide, which could have led to an improved entry?

         3. Was the initial stop location appropriate? Was it in accordance with your trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

         4. What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

         5. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

      3. If this was not a valid trade:

         1. What signals were present that should have led you to avoid that trade?

         2. Having got into the trade, was the initial stop location appropriate? Was it in accordance with my trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

         3. What was the optimal way to manage this trade, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

         4. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

      4. Replay that portion of the trading session, making optimal decisions for valid trades and avoiding invalid trades, either by stepping manually through the chart bar by bar, or use a market replay feature. 

   3. Trades Missed

      1. With the benefit of hindsight, where were the valid trade opportunities that were missed?

      2. For each of these trade opportunities:

         1. What signals did the market provide that should have alerted me to the trade setup?

         2. What was the ideal entry point? What signals (if any) did the market provide, which could have led to identify this ideal entry?

         3. Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

         4. What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

         5. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide to identify these ideal exit locations?

      3. Replay the trade, making optimal decisions, either by stepping manually through the chart bar by bar, or use a market replay feature. 

   4. Summarise this session’s performance in the trading log.

4. Physical and Psychological Performance Review (approx 2-3 mins; document any observations in my trading log under the heading Perf Review)

   1. Were my fatigue levels appropriately managed?

   2. Was I in optimal physical condition? What can I do to improve?

   3. Was my ability to sustain focus at an acceptable level? What can I do to improve?

   4. Was I accepting of emotion during the trading session, without letting it unduly influence decision making? What can I do to improve?

   5. Was my mental state during trade execution one of confidence and self-belief, or one of fear? Why? What can I do to improve?

   6. Am I satisfied with my performance during this trading session? What can I do to improve?

   7. Do I feel I am making progress in my trading performance from day to day? What can I improve?

   8. Write summary notes.
      

5. Next Session Preparation (approx 2 to 3 mins; document in my trading log under the heading Next Session)

   1. Document any goals for the next session (process goals, not outcome) 

6. Final Relaxation and Breathing Session (quick – 2 to 3 minutes max)

7. Completely let go of whatever happened during the trading session
   

Before Bed:

1. Relaxation and Breathing Session (quick – 2 to 3 minutes max)

2. Visualisation of success – achievement of my outcome goals

3. Completely let go of whatever happened during the day

That’s it. Nice & simple. With experience it will typically take around 60 mins. You don’t need to sim replay EVERY trade (although if you have time then that would be great). I’d suggest sticking to just those that offer the most learning potential, and could have been managed better. In fact, run through them several times if you can, for maximum benefit.

Happy trading,

Lance Beggs.

P.S. For an example of the Trade Review part of this process, see the previous articles here:

• Part 1 – https://yourtradingcoach.com/trading-business/how-to-conduct-an-effective-trading-session-review-1-of-2/

• Part 2 – https://yourtradingcoach.com/trading-business/how-to-conduct-an-effective-trading-session-review-2-of-2/