I don’t have to write another post to tell you why do you need to keep a trading journal. I assume you should know if you are taking trading seriously. But, I guess, most of the traders might have the same problem which I used to have, ‘over review’ your trading result.
No doubt, we have to review our trading results or the accounting book of your business. Do not try to hide the losses and mistakes to yourself. After all, this is our own business, isn’t it?
But just how frequent should we do that?
After trading for a little while, I figure out, doing a monthly review is pretty much enough for day trader, like myself.
Why monthly and not weekly? Well, this is not a rule, but an observation.
I used to do a weekly review of my trading. It is useful. But, it does not really tell me my overall performance. In other words, the weekly review is kinda ‘short-sighted’.
Why is it so? Let’s take an example, during the FOMC meeting week, the market might be a little bit choppy, most likely traders are waiting for the interest rate decision. I might be trading extremely well during this kinda week, or I might be chopped to pieces. Does the result of the week itself tell me a little about my over performance as a trader? Nah, I don’t think so.
So, why do we spend time to analyse the result of the week, and feel ‘happy’ or even ‘devastated’ about it? And subsequently thinking about ‘maybe I should not trail my stops’, ‘maybe I should wait when the candle closes above yesterday’s high’ , blah, blah , blah. Maybe I should change the system rules! again?!? I don’t see a point.
In fact, it is similar to trading. Do not trap yourself in the 5-minute charts and forget about the hourly chart or even daily chart. Why? Over the long run, the big picture tells you more about the ‘truth’.
I would think a monthly, quarterly, and yearly review of the overall trading performance is pretty adequate. Tracking monthly cost of trading, reviewing mistakes, analyzing the system performance over different weeks, or even seasons. That’s more effective, well, to me.