I want to start by taking you back to an article published in December 2021 and reposted just two months ago – Two of the Most Important Weekly Review Questions.
Two of the MOST IMPORTANT weekly review questions:
- What is my current goal?
- What do I need to do to get there?
Not vague goals like “I just want to be profitable“. Narrow your focus to something specific, detailed and achievable.
Small incremental improvements. Stretching just slightly beyond current levels of performance.
And then push for it.
Everything else is a distraction. Your whole week MUST be devoted to achieving this new level of performance.
So… today’s article is inspired by a trader who has read this prior article but is still not structuring his weekly reviews in an effective manner.
In his words, “I just don’t know what I should be working on each week“.
My response was to refer him back to this prior article. And one line in particular.
- “In the absence of anything better – aim for a combination of win rate and win:loss size ratio that improves upon recent levels of performance.”
If you have nothing else that you KNOW specifically needs deeper work, then work on this.
1. What is my Win%? (number of winning trades / total number of trades this week)
2. What is my Win/Loss Size Ratio? (average win / average loss)
3. Which one underperformed? If both underperformed then pick the worst. If neither underperformed, choose the one that appears to offer the most potential for improvement.
4. Conduct a deep review of the trades to find reasons for underperformance and a plan for improvement. NOTE that alongside this improvement your aim is to not damage the other statistic, beyond acceptable levels of performance.
5. Define your goal for the coming week. Not an outcome. The PROCESS you will use in an attempt to achieve the outcome.
6. Target it. Relentlessly focusing on achieving that specific improvement in the coming week.
Your last-week stats form a current short-term benchmark; a point of focus from which you will demand improvement in the coming week.
Consider the quality of your trade ideas with respect to the environment. Are you trading too often in poor conditions? Are there better ways to recognise and adapt to these conditions? Are you missing trades in areas of better trade conditions? How can you capture them in future?
Are your initial stops too tight? Are you consistently being taken out of the trade before it moves in your favour? Will widening the stops improve your stats? Will re-entry improve your stats?
Are you scratching trades as soon as they go against you? Consider your mindset at the time. Find the lessons. And consider more mechanical rules or checks to aid with your decision making.
Is your profit-taking plan unrealistic, resulting in giving back open profits and closing at a loss? Do your targets actually match the environment? Is there a way to lock in some gains, scaling out the positions rather than holding for a single all-out exit.
Note that in seeking an improvement in win rate, we may be willing to accept a slight reduction in the win/loss size ratio. It’s normal for this to happen.
Again consider the quality of your trade ideas with respect to the environment. Are you actually trading in areas and at times that do offer greater movement?
Are your profit targets too short? Could they be widened? How would the stats change if a partial position was held for a runner beyond current targets?
Are you scratching trades as soon as they show a slight profit, so as to not give it back? Consider your mindset at the time. Find the lessons. And consider more mechanical rules or checks to aid with your decision making.
Are your stops wider than necessary? If there is scope to tighten them, how would that impact the stats?
Note that in seeking an improvement in win/loss size ratio, we may be willing to accept a slight reduction in the win rate. It’s normal for this to happen.
There’s no right or wrong. Pick one. (Personally for my own trading I’d be seeking WLSR improvement as a 50% win rate is absolutely fine!)
Taking it next level:
The process above is a good starting point. It provides some structure to your review. And seeks to drive improvement from one week to the next.
The prior week stats are used as a short-term benchmark, from which we drive improvement in the coming week.
In time though, you will develop a feel for the “normal” range of weekly stats for your strategy and your style of trading.
And they will form a longer-term benchmark, allowing comparison of current weekly stats with this typical expected range.
Perhaps something like the following (again noting that these figures are example only and will vary for your trading strategy, style and frequency of trades):
- Benchmark Win%: Ideal range 55-60%, Acceptable range: 45-70%
- Benchmark WLSR: Ideal range 1.1 to 1.5, Acceptable range: 0.8-2.0
- Anything outside of these ranges (low or high)… investigate in depth.
The aim then is to:
- (a) Seek consistency in achieving these weekly benchmark ranges, and
- (b) Seek gradual improvement in benchmark stats.
Take control of your review process. And use it to relentlessly drive improvement. Initially, in the absence of anything better, focus on the stat that offers greater scope for improvement. And in time, when longer-term benchmark ranges are available, focus on ensuring consistency within these ranges and gradual improvement in benchmark stats.
Trading is a business that demands a relentless, never-ending drive for improvement. Go for it.
PS. The discussion above talks about the weekly review process. The same concept applies for those who conduct reviews upon “groups of trades”, such as 20-trade groupings or 50-trade groupings. Focus your review process on small, incremental improvements. And actively drive your growth and development. Unstructured reviews, or reviews with vague or poorly defined goals, are simply wasting your time and effort. And in the absence of anything better – aim for a combination of win rate and win:loss size ratio that improves upon recent levels of performance.
This is just absolutely beautiful and golden article. It is basically a templet , and a roadmap, how to constantly become better, keep growing and improving at anything in life, not only trading! This one is definitely going to my bookmarks. I will improve my reviews, and I will keep getting better at it step by step.
Thanks! Step by step is the only way. Constant and never-ending improvement.