To Boldly Go, You Need a Log


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Stardate CE09.09.2022

Logs are tedius things, and I’ve done a lot of thinking on how to ease the pain of having to record each trade and various details about it. Eventually, I came up with a radical approach: I rely on my account statement to do the recording, while I determine how to analyze it. To make this approach work, you need to get your record of trades in spreadsheet form. The specifics of how to do that will depend on your broker and your trading platform. I favor using Excel, but any decent spreadsheet application should work. What’s important is that you learn how to use more advanced features on the spreadsheet. Be able to use formulas to calculate fields and be able to import external data into your spreadsheet. If you have skills in using databases, such as MYSQL or MSSQL, you might consider uploading your spreadsheet data to the database and using the database’s query language to reveal insights.

When you trade, you create data, and data is the currency of our age. So save it, but intuitive analysis also has a place in trading. I’m not talking about superstition or lucky hunches. Scientific studies start with a hypothesis, which is rigorously tested. So should you. If you think profit can be made by trading options on stocks that show decending implied volatility, test it by trading such issues on a paper account. Your bottom line over time will support or negate your hypothesis. Do you think you have technical skills that forecast price action? Test yourself by looking at a chart segment from last month or last quarter and seeing if your expections regarding levels of support or resistance hold up. You might consider using an idea log for recording your intuitions and ideas about how they might be tested. Periodically read old entries in the log. See how your thoughts have changed, how they’ve improved as you’ve gained more experience and learned more things.

Key take-away: As Yogi Berra said, “Life is a learning experience only if you learn.”

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