I track my performance thru My PnL Trading Log in an Excel sheet. I have 4 separate columns. First column is the PnL, second column is the Disciplined Sell, third column is the Overnight Holds(ONH) and the fourth column is labeled "Observations", this column discusses the market observations: For Example: "market gapped higher but internals leaned more to the negative side, GS and GOOG were down big early. Took one trade in SKF as i figured the upside wouldn't hold. Made two trades and stuck to my discipline."
ONH column: tracks my PnL from overnite holds, the consistency of this strategy is no where near as good as the DISCIPLINED SELL.
I have been using this same excel sheet for over years now. This Excel sheet has allowed me to realize is OVER TRADING IS A LOSERS GAME. At least for me it is, some people can trade all day and walk out with good gains consistently, good for them. I am NOT one of these people. The more i trade, the more emotional and sloppy i get. I feel that if i hold myself down and ONLY put 1-3 trades per day, I will INSTINCTIVELY be picky and ONLY demand THE BEST SETUP, even if that means NO trades on the day. When was the last time you sat down in front of the computer and starred at those colorful moving charts and DID NOT push that button?? I have to admit it is very very difficult. Trading is fun, it's addictive and satisfies an urge BUT if you are feeling these kind of emotions while getting ready to trade, then you need to step off and think of what you are getting into.
Anyways, look at DISCIPLINE SELL column and you will notice that this coumn has been the MOST profitable column by far. Thru out 2008, this column has been the RUN AWAY WINNER. There's a lesson to learn here, overtrading has hurt me and took away amazing profits from me. Disciplined SELL is when you have made a trade or two and you are satified with the gain or if your gut tells you, this is enough, whether it's a gain or a loss and TYPE in the PnL in the excel sheet and walk away and you are done for the day. Once i break that rule and break my discipline due to lack to discipline/greed/fear/emotional or lack of focus issues, then i have trade again and 9 times out of 10 i will either lose some/all of my gain or if i was sitting on a small loss at the moment of the DISCIPLINED SELL, then SURELY that small loss will get BIGGER and sometimes much bigger.
OVERTRADING is a dangerous game that will spark your emotions and make trading much more difficult, confusing, and very stressful. I want to strive to live a low stress trading career.
Hope this helps you guys.
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