By Jody Samuels
Before we dive deep into the trading blotter…
This article in The Trader’s Pendulum Series is the Take Action article for completing a daily Trading Blotter, as you move from hobby to business in your trading. In the last article we took you through a Take Action set of questions which you could use to develop your trading system as part of the ‘A Day in the Life of a Successful Trader’ series. Your mission in developing these habits is to get out of the Technical Trader’s Trap and transform into an Entrepreneurial Trader so that you can start being accountable to your trading. There are several Take Action steps that you are now equipped with so the ball is in your court. You should also have completed the Scorecard (www.fxtradersedge.com/scorecard) and are ready to get down to business by arranging a free coaching session.
Take action with your trading blotter!
The Daily Trading Blotter is a checklist that enables you to review your daily trading performance: specifically, whether you have planned your trade, and traded your plan.
It should be used together with the trading journal. The difference between them is, the Trading Blotter is filled out before a trade is taken and after a trade is closed, and the trading journal before, during and after to track emotions. You will get into your own groove in terms of when to fill in the journal during the trading session.
The Figure above shows a screenshot of the Trading Blotter that I developed. Besides helping the trader to run through a checklist before writing the trade plan, this Trading Blotter can also be used by the trader for his pre-market analysis, and for his post mortem analysis, as it prompts the trader to examine his frame of mind during trading, whether he was affected by emotions, how well he had prepared for the trading session, and so on.
The first section provides the context or analysis for the trading session and it forces the trader to look at what is going on in complementary markets, what the key levels are to look for, and whether the market is in a trend or correction. Looking at support and resistance, including pivot points, and Fibonacci levels can greatly enhance the trader’s ability to define price targets and better entry levels. Understanding what is going on in other markets will greatly contribute to a trader’s understanding of the fundamentals and what is driving the markets.
The middle section includes the Checklist and the Trade Plan. Go through a checklist of confirmations will add confidence to any trade defined in the trade plan. The trade plan defines that actual position size, entry level and exit levels for each trade. Exits include stop losses and profit targets.
Finally, the third section of the trading blotter is the post mortem analysis for the trade once it is completed. By answering questions involving feelings before trading, actual trade planning and actual trade results, it helps the trader to “own” his or her trading decisions and it completes the process. Now, the trader understands what can be improved on for the next set of trades.
If you’re interested in adopting these habits and working through the business planning template for Habits 1 – 10 discussed in this article series, the book is a detailed blueprint for you to follow and make your own. The book is also supplemented by a companion website with downloadable tools.
If your mission is to become a trader or investor who stays out of the Technical Trader’s Trap, then take the leap to grow into an entrepreneurial trader.
I created the FX Trader’s EDGE Coaching Program modelled after the “10 Habits of Successful Traders”, which is the title of my newly published book by Wiley.
Excerpted with permission of the publisher John Wiley & Sons, Inc. from The Trader’s Pendulum: The 10 Habits of Highly Successful Traders. Copyright (c) 2015 by Jody Samuels. This book and ebook is available at all bookstores, online booksellers, and from the Wiley web site at www.wiley.com.