Thursday, December 11, 2008

My PnL Excel Sheet

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.



Blue said...

I agree with you 100% about over trading. I am the same way. Exactly the same. The hard thing is the pressure that comes with wanting to be right for those 1-3 trades on the day. I'd like to share another personal story and some insights I've made.

I had a Friday in Oct. (after my hot streak slowed) where I made 11 trades for +$290 on the day. $290 was the best I could do that day with the way I was trading. I knew at 12:30 I should just call it quits, but I wasn't happy. I wasn't happy with the small profit. I wasn't happy with not even making $500 on the week when $500 was my daily goal. I felt compelled to take a last minute trade. So I did and I lost $1400 in about 2 minutes. I was scrambling to make up for a prior $1400 loss earlier in the week. Even though I recognized it was most likely the wrong thing to do I did it anyway. I did it in defiance of feeling that it was the wrong thing to do. After repeating the same basic pattern for the fifth time I started to reflect on what I was doing and it taught me an incredible lesson. I starting to care less about the money.

I'm attracted to the emotions of trading the stock market and the freedom. Success or failure is 100% your fault. It's really not the money, because I'm not even spending it. That's why I'm not a fan of keeping a spreadsheet. It's easy to obsess over the money. That obsession is damaging. Obsessing over the money limits you as a person. It limits your growth and it limits your potential. There will never be enough of it if that's all you care about. Ted Turner's Dad had a lifelong goal to own a ranch, a yacht, and X amount of money. He became one of Georgia's wealthiest men. He had his ranch, his yacht, and X amount of money. One morning after breakfast he realized he had nothing left to achieve and shot and killed himself. Ted Turner said that taught him an incredible lesson. That he had to make his goals nearly unachieveable, but something to continuously strive for. Ted Turner's goal is world peace.

I rather focus on my potential as a trader than focus on income. Think about that for a minute. The income goal will never be enough and it will always change. What happens when you meet your income goal early? What happens if you never meet it? I want to be the trader I envision being, not the one I've been. When I become the trader I envision the money won't even matter.

The less I care about the tally the better I trade. That's what unlocked my October run. Then I got scared and got the sick feeling in the pit of my stomach like I was going to lose it all, again, and reverted back to trading scared. I sat out most of Nov. and the 8 straight days of selling. I made nearly all my money in Oct. trading SKF, so watching it take off to 300 in Nov. was enlightening. It is amazing to just sit and watch and see the most obvious trades happen. I sat in astonishment laughing while the most obvious things to me actually worked. It was easy because I had no trades on. When you can watch it all unfold, emotionally detached, it's a liberating feeling. I want to be that liberated as a trader. I want to be that emotionally detached when all my money is on the line. I'll never get there obsessing over each tick, obsessing over each profit, each loss, each days profit and loss. You have to find out what will unlock your potential. I want to obsess on that now.

FX said...

Well I really like this post and would like to see more like it, where you "write a lot". Charts are interesting, but for me not so important because I scalp forex. Sharing your experience like this is most valuable for me.

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