BarroMetrics Views: Journal Idea
The 3Ms govern trading success:
- Mind: winning psychology: success is dependent on keeping the instinctive ‘fight, flight, freeze’ response at bay as well as constantly integrating new knowledge about ourselves and the markets. As a nomenclature for this state, I have adopted Range Howell’s phrase “Traders State of Mind”.
- Money: risk management: success is dependent on managing a trade and the risk of a trade. The purpose is to balance the conflicting aims of maximize returns and minimizing loss of capital.
- Method:investing/trading methodology: success is dependent on have a method that provides a guide to the subjective probabilities of a trade/investment.
I see this trio forming an bond governed by the ‘equation’: Mind x Money x Method = Success
The weakest link in the chain will govern the ultimate result. So, it is important we seek to continually improve.One essential way is by the use of quantitative (quant) and qualitative (psych) trading journals: quant journals provide the stats for our trade; psych journals provide the ’soft’data:
- the state of mind,
- process of thought,
- external condition
that were present when we took the trade. And speaking of journals….
…the other day, I Lance Begg (YTC) wrote a item in his newsletter that caught my attention.In his article, YTC Trading Newsletter (28 June 2013), Lance introduced reader to Josh. To quote Lance:
“He’s still in the early stages of his development, developing confidence in his strategy and processes through historical chart review. He’s doing this using ForexTester software which allows for trading of historical charts as if it were a live market environment.
Josh has been making tremendous progress”.
I can see why. Josh puts in the necessary work to improve. I liked the way he integrated the ‘history’ of a trade into one chart. As a visual trader, I also tend to place my comments in charts, but have limited myself to one chart per timeframe. Josh’s idea of integrating the traders timeframe, and his thoughts into one is a great one.
Lance and Josh granted me permission to reprint his charts. Trust you will find his ideas useful