Lecture Notes on Using Journals for Trading

Introduction

• Journals are often used in trading to track performance.
• Presenter argues that traditional statistical tracking (e.g., percentage of good trades) is not very useful for improvement.

An Alternative Approach to Journaling

• Instead of a general stat sheet, create a journal with 40 pages, each dedicated to a specific topic related to trading.
  • Examples of Pages: Ranges, hold levels, break levels, reverse levels, floats, etc.

Process of Creating and Using the Journal

• Recording Trades: Document trades related to each specific topic.
  • Example: Record outcomes of trades related to hold levels.
• Testing Levels: Evaluate different levels on a chart (e.g., 4-hour, 15-minute levels).
  • Determine which levels make sense for trading.

Benefits of This Approach

• Encourages detailed focus on various trading factors.
• Allows traders to see where they are strong or weak.
• Two Piles Concept: Separate trades into two categories:
  • Pile A: Strategies with more than 50% success rate.
  • Pile B: Strategies with less than 50% success rate.

Decision-Making Based on Journal Insights

• Focus on Profitability: Prioritize strategies in Pile A to make money.
• Focus on Improvement: Study and improve strategies in Pile B.

Developing Micro Strategies

• Use journal insights to develop specialized strategies.
• Focus on areas where you excel (e.g., origin levels).
• Avoid strategies with low success rates (e.g., float levels).

Educational Perspective

• The journal helps identify areas for educational growth.
• Conduct experiments and trials to refine understanding and skills.

Final Thoughts

• The goal is not just to see improvement in percentages but to understand the reasons behind success or failure.
• The journal serves as a tool for strategic development and consistent improvement.
• It's essential to develop a system tailored to your trading strengths and weaknesses.