Let’s face it, we all want to improve our situations in life… and with trading it’s no different. You see, as traders, we have to evolve… otherwise, we’ll get left behind and don’t live to trade another day.
For example, think about perennial bears from the last decade who just tried to short the market because they think it’s too high…
Well, there aren’t too many of them around anymore…maybe it has to do with the historic bull run we’ve been on.
If you can’t pivot, you’ll be left in the dust…
The market is always changing, and those who are successful are able to adapt to the conditions.
That’s why the top traders are constantly evaluating their trading performance, and checking to see what adjustments and tweaks they need to make to maintain a high level of performance.
(That’s the PnL of my most scalable, profitable, and accurate strategy ever. And this Thursday I will be revealing it live, at this exclusive online event.)
Two Ways to Evolve
Whether you’re trying to improve by refining a strategy or learning new ones… there are two ways to do that, by journaling and paper trading.
Now, you might be thinking, Jason, how are journaling and paper trading going to help me? I thought trading is all about making money.
Well, when you’re developing new trading strategies… you probably don’t want to put real money behind those trades just yet.
Those strategies haven’t been proven, so like in business, you have to show proof of concept first.
That’s where paper trading can help you.
If you don’t know what paper trading is, you’re using “play money” to trade. In other words, if you’re testing out a strategy and take a few losses, it won’t affect your real trading account.
However, a lot of traders who start paper trading just treat it like a game… doubling down when a stock moves against them… buying a ton of shares, which isn’t realistic to their actual account size… not planning or journaling.
If you’re going to do it… Take it seriously.
(most online brokers offer “paper money” accounts for clients to practice with)
You’ll want to treat paper trading like it’s your actual money.
For example, if you have a $10,000 trading account then paper trade a $10,000 account. You want to try to mimic a real life trade setting.
However, it’s not just all about paper trading… it’s also about journaling and keeping a log of your trades.
Tracking Your Performance
How do you know if you’ve improved as a trader if you don’t track your performance?
Sure, you can use your PnL statement to see how you’ve been doing, but that doesn’t give you an idea of what’s been working and what hasn’t been.
You see, journaling actually gives you a deeper look into your performance – allowing you to refine your strategies… and figure out whether you should start putting real money behind your new strategies.
So what do you include in a journal?
Well, for starters, your journal should include things like:
- Total profit and loss (PnL) for the day
- Number of times you traded
- Which strategies you used – were they based on a specific chart pattern, indicator, catalyst, or fundamentals, etc?
- Sleep and exercise habits, diet, etc. These factors affect your performance, especially if you don’t get a good night’s rest.
(My momentum trading is kicking butt this year, but it pales in comparison to my latest strategy. Register for my exclusive online event this Thursday, as I unveil what I’m doing for faster and bigger profits)
Now, when you’re writing about specific trades, you should include:
- PnL for the trade.
- Stock symbol, date and time for entry and exit, chart of the stock.
- The reasoning behind the trade. Why did you get into the trade, was it based on a specific strategy, a pattern you like to use, etc.?
- What you have done differently and how you could improve the next time you see the same setup.
Once you have some journal entries… it’s important you review them to try to find patterns of how you could refine your strategy.
For example, maybe you find that you’re leaving money on the table on your trades because you take profits too quickly. Then you can develop an exit plan strategy and see whether it works…
… or maybe you find a new strategy that’s working… and realize you can finally put it to the test.
That said, I’ve been developing my momentum small-cap trading strategies for years now… But I can proudly, and confidently say that my newest trading discovery offers greater profit potential, better risk-reward, and is 100% scalable…
Heck, if you wanted to copy and paste my trades you could with my new strategy (something I never recommend you do with my momentum trades).
I’m so excited to share the details, you can find out more this Thursday, July 11, at 8:30 PM ET, when I unveil Weekly Windfalls, my easiest, most consistent, and profitable strategy to date.