BarroMetrics Views: Tracking The Quality of Our Trades

In the comments section today, D asked how do I track the quality of my trades.

My answer…

I keep two types of journals:

  • a qualitative journal - my ‘psyche’ journal. This journal has 3 aims:
  1. to identify patterns of success and failure in my qualitative environment. For example, if I have 10 consecutive winning trades, do my processes change? Do I stop doing what has brought me success? If so what will I do differently next time. I seek to record any changes or significant events in my psychological environment just before and during a trade.
  2. a safe place where I can vent - a place where I can pour out my frustrations, anxieties, and fears on the one hand; and on the other, the successes, elation and rewards.
  • a quantitative journal where I keep the stats I use to assess my trading. Over various time frames I keep:
  1. Ave$ win
  2. Ave$ loss
  3. Win Rate
  4. Loss Rate
  5. Date, day and timeĀ  of trade
  6. Consecutive wins
  7. Consecutive losses
  8. Rating for trade where 3 points means I enter and exit in line with my rules; 1 point means I enter OR exit in line with my rules; 0 points means my entry and exit were not in line with my rules OR I failed to make a trade my rules said I should. My aim is to achieve 90% of the possible points in any month.

The ratings are a rich source of information. For example if I scored less than 90% and had the best ever dollar result, I would want to know how I did this. Questions to consider:

a) Has my intuition found a new pattern?

b) If I had followed my rules, would my result have been better or worse? etc.

Trust that answers the question.