Welcome back to PBT!
Today I decided to share with you my process of Monthly analysis. This is crucial in any traders journey as it will help you stay focused on your best setups, know your timing, adapt to market conditions and stay mentally and mathematically fit. For Monthly analysis we will be analyzing some information that I personally use. I definitely will recommend that kind of self-analysis to anyone who is in trading. You can do it on a weekly or on a monthly basis.
One of the pieces of info are my results from the PropReports and other two sources are Trade Screenshots (that are done daily at the close of the session) and Statistical/Psychological Excel spreadsheet that I am using to track my mistakes, write thoughts and market comments.
I would like to start with my trading screenshots. This is a process of reviewing your trades day by day and try to find what are the common mistakes/situations where you could become better in executing the setups, trailing your good positions and maybe avoiding the ones that dont give you an edge.
As posted here, these are some of my good trades. For them I dont see a lot of a problem except I could have exited in tiers and not covering all at once. Its very important to know what you can do better in good trades as this will help you become even a more productive trader.
At the same time, the issues are in the trades that represent losses and our next step is to identify why and where, under which conditions and circumstances a trader does occur losses, how big they are and how to avoid them. Usually 50% of the losses could be fixed by focusing on just 1 mistake. Lets now take a look at a few charts.
From what you can see, I do have some mistakes and I can notice some important information about these trades. Also these are not all the losing trades but just some of them. Considering all the pool of information, I can identify that in June, the quality of the trades was not at the decent level. The main mistakes that showed up are:
- Shorting strong stocks without daily confirmation (pattern)
- Going long weaker stocks without daily confirmation (pattern)
- Being not patient enough so the market/stock can confirm/deny my trade concept.
Where do all these mistakes come from? In my view, this is mistake of preparation and I will have to deal with that with maximum focus. Preparation and focus on setup, market, stock should be more effective so for the next Month, this will be one of the key points I should be working on.
Now, lets take a look at the statistical mistakes from the Excel spreadsheet. But first I will show you a sample of a daily information that is included in the spreadsheet and how it is built. (I will use a virtual sample to show).
Now to my own data.
I have a problem I am struggling for months, and this is being too fast in the morning. Some traders do imply a 30 minute rule that will ban their trading for the first 30 mins but as you have noticed, one of the biggest moves are in the morning so our psychological desire to take advantage of these moves push us to jump into the train too early. This approach has two major issues.
- Direct issue – once the market opens, its very hard to place a decent stop as you dont have chart patterns on 5 minute chart and lower 1-3 minutes you can encounter often setup failures as in the morning the spreads are wider, Market on Open Orders get filled and there is much noise.
- Once you had a few trades in the morning, if they are positive, you dont want to get in the market to keep your morning profits – so its a fear for risk of failure. If you encountered losses in the morning, you no longer have a clear mind and can process the information constructively because you had this negative experience in the morning. Of-course a pro trader should have no emotions but we are just humans and sometimes it happens.
The conclusion for this is DONT TRADE IN THE MORNING. (first 30 min are a way to keep you out of the losses according to my stats) Scalpers and Small Cap traders will argue with that but Im doing the analysis of my own trading style so guys dont be so critical. 🙂
I believe a lot of brokers use PropReports.com to offer information on the account statements for their traders, I am not an exception but did you know how you can use your information in your trade review? I will share my review process on this info.
The most important part that I am looking for are the stats like BAT (which is probability of a profitable trade) and W/L (win loss ratio) averaged for the whole month. Also I would like to see the timing of my trades knowing Im being too quick in the morning. Another factor here are the days of the week during which the trader is more effective and how it relates to the market.
From the results shown, we can identify the following conclusions for the whole month of trading:
- Morning trades as noticed in the screenshot section have the worst probability and lowest win/loss ratio.
- Overall probability is lower that expected – I would like to have 35-40% probability of a profitable trade with a win/loss of 3.5-4 to 1 on average.
- Wednesdays are not my most efficient days considering probability and win loss ratio.
Conclusions for the whole months should be a rule set to follow:
- I skip the morning trades totally – I start trading at 10:00 AM.
- I give myself not more than 3 trades on Wednesdays with 50% less per trade.
- I have to work on my setups to become more efficient in my entries.
- Tiering out of the position will start on achieving a risk reward 4:1 and higher.
On this note I will finish this post and focus on getting my mind ready for the next month. We all know we are having the 4th of July next week and the volatility could be down so trading will require more focus.
Here at PBT we are focused on being honest with you guys thats why Im sharing all this knowledge/experience and results with you. Im not a super-star trader, nor I am making hundreds of thousands a month but I am working hard to respect my process, get better and identify market opportunities with calculated risk.