Developing Your Trading System
A trading system (that’s why we call it TradetheSystem) for navigating markets are a must. Your system becomes your game plan, your trading GPS. If put together correctly it will identify turns to take to reach your desired destination. In tonight’s video/blog post I would like to pass along a few of the signpost along your route that will help you stay on course.
The first step is something I have used for years. A Yellow Legal Pad. This pad becomes your personal keepsake, a Trading Journal, in which you log each trade.
What do you log? To start, I log the time of day I took a trade, the entry price, number of contract, and most important – THE STOP PRICE. Once I have entered the trade the last thing I enter is the exit price. These 5 things to journal will begin to set you apart from many traders. The next question is WHY?
You enter the time because it’s important to track when you have your most successful trades. Do you trade better in the A.M. or P.M. For you what is the best time to focus on trading. It may be only 1 hour in the morning. We all have our best times but how would you know unless you track it.
The entry price, Duh, yes, the entry price because you should observe how accurate you are in entering trades. Are you late because you have a fear of clicking the mouse and you end up getting a fill 10 points higher or lower than the desired entry price.
The number of contracts. This answers the question, are you over trading or under trading according to your talent level? I ask this question all the time. Can you make $50 consistently trading one contract?
The Stop Price. If you don’t have a Stop you don’t have a trade. Those that trade without a stop will end up taking the big hit. That’s OK, but how many big hits can you take before you fold up the tent, get discouraged and go home not to trade ever again.
Now for “One Last Thing” – At this point it is all money management. Do you take your profits early and let your losing trades run or do you let your winning trades run and cut your losing trades short. The Trading Journal will reveal how well you are progressing as a trader and reveal where you need improvement.
Trade Well & Trade With A System –