The merits of trade journaling are widely reported on in the trading world, even at the most basic level of education the benefits of keeping track of our trading and interrogating past performance in order to enhance our edge are without question. The rub however, is at what point does the time invested in journaling, tweaking and overviewing data that might not improve progress start to become counter productive?
I listened to a webinar recently discussing just this and I find it a really interesting topic. I’ve always kept a trading journal, as I hopped from methodology to methodology I too hopped from the best way to keep a track of the method. I’ve been around the block with this and I think trying to develop a sexy trading journal with pictures and a plethora of statistics is another area that can cause traders to come unstuck, it is potentially just misdirection.
Recently I’ve become much more a fan of the need for simple specificity. The only function of a trading log, I’m my current opinion is for the reviewing of past data to better influence future actions, obvious statement right? Where we go wrong though I think is in getting sucked into the bells and whistles that trade journal providers offer us.
I got to thinking about this back in Italy on groundshool for the AW 189. The aircraft has a multitude of ways for achieving the same thing, for instance if I want to simply change the range scale of the digital map there are a number of ways I can do it, when we asked the instructor why there wasn’t just one way the answer was interesting – “Because different people like to do it different ways and we have to give you options”. I think trade journaling, and more to the point the variety of software that is out there now, is the same.
Software developers providing journaling software have done a fantastic job of implementing not just the basic concept of storing trade data, but have refined a whole host of ways that their software can help you analyse and display that data, a lot of the time with a lot of functions that by and large tell you the same thing. The danger of this is that we get lead down the garden path into using things that we simply don’t need, or will just lead to time lost looking at things or entering data that wont help us, usually it’s a combination of both and the simple fact that the software is there to help all traders of all kinds and so isn’t specific to our particular edge.
I’ve played around with a variety of trading software, paid money for some and by and large think that they are good value, if you intend to use them fully. If not, I think they are a waste of time. I say that because the amount of time I’ve spent writing superfluous trade comments in a log, only to never really use them is astounding. It’s fine if I was swing trading as I’m sure those market insights and comments would be useful to understanding an entry, they are not however, any use for understanding a momentum scalp for instance, or at least I don’t think so. What you need is basic data and a screen recording.
It is for these reasons that I’ve decided to stop using trade journaling software and go back to basics with Excel. Personally the information that comes out of a Ninja generated report has most of the information I use anyway and can serve as a template for a master trade log that I can then use Excel’s VBA to try and build any specific charting data display that I might need.
For me, having a basic set of data that I will refer to properly, and can use quickly is the key to understanding what I’m doing right and wrong and truth be told, if I’ve spent 3 hours writing every scalp into a trade log software the chances are it’s the last thing I’ll want to look at again that day and so will probably just glance quickly at the equity curve, which largely isn’t that helpful.
Obviously, this is just my opinion and everyone should do what they feel is best for them, but as I’ve never really gotten on with these products, I’m giving up on wasting the time trying to import statements, tweak settings and get it to display just right, treat break even trades as just that and not losses due to commissions, account for those commission structures correctly or simply match my account value. I’d rather just learn how to use Excel’s VBA and get the journaling entry process time down to the minimum, that way I can spend more time actually pulling the salient points out of the data, and hopefully using it to improve my trading.