Are you "The Unexamined Trader"?

2020年10月4日

Socrates famously said “The unexamined life is not worth living.” Why do we do what we do, why do we feel the way we feel about something, or what is our purpose in life? These questions brought about generation after generation of journals, diaries, and random thoughts from some of our greatest thinkers from Socrates himself, to Jonathan Edwards in early America, and maybe even yourself. If we look at the information, meditate on it, we *should* take future actions that will be purposeful and not live day-to-day mundane lives. We want lives of purpose, of meaning, and of growth and satisfaction.

The same thing goes for our trades. So many of us trade willy-nilly, never looking back as to WHY we took a trade, what was the PURPOSE of the trade, what did we LEARN from that trade, and what are we NEVER going to do again or what will I CONTINUE to do in my future trades?

Just as an unexamined life is not worth living, the unexamined trader should not be trading.

“Why do I keep making the same mistakes?” “How come I let my emotions get the best of me?” “Why do I always seem to miss out on best trades with the monster returns?”

Ask yourself, do you examine each and every one of your trades? At the end of each trading day, do you look for patterns of profit and signs of “The Suck” that draws your account down day after red-candle day? Can you look at the psychology, feel the emotion of why you planned a trade, why you got in a trade, how were you feeling during a trade, and why did you get out of a trade when you did? After that, did you ask “What did I learn?” “What will I continue to do?” and “What mistake will I eradicate from my mindset and NEVER do again?”

There are three kinds of people: Those who make things happen, those who watch things happen, and those who ask “What happened?” The same goes for trading. If you never look back at the trades you took, especially the ones that were losers, you will consistently ask “What happened? Why am I always a loser?” If you watch things happen *plus* examine all the factors that went on during the process, your trading ability will grow inch by inch, yard by yard, which will turn you into one of those top traders who MAKE things happen. You will be able to *see* the money on the chart. And once you learn to identify patterns by analyzing trade after trade after trade, you find there are *limitless* opportunities to make money. (I paraphrased that last sentence from Mark Douglas, Trading in the Zone, which I highly recommend.)

All that said, DO YOU JOURNAL? The trade journal is often the most overlooked tool in the trader toolbox. There are several ways to do so, and there are a plethora of traders on YouTube who share their ideas on how to journal your trades, and I recommend that you try several methods to find what’s right for you. The method I like is to screenshot of my trade and document the fool out of it right there on the chart. Then I “tell the story” via text boxes and arrows, and I number each one of them to walk myself through the story. Yes, each trade has a *story* to tell. I include the FACTS of the trade (the levels of Supply and Demand, the RSI, the trend, whatever factual decisions that went into the trade), the PSYCHOLOGY of the trade (how did I feel when price started going sideways right when price went to 2/3 towards my target?) and the results of the trade (what did I learn, what did I do great that I will continue to do, and what did I not do well that I should remove from my plan or my psychology).

The proof is in the puddin’ as they say… The Covid lockdowns of early 2020 were the "best worst thing" to happen to my trading career. I was a Covid Casualty, as my employer shut down in part as a result of the Covid lockdown requirements. I was mad, upset, depressed, that I couldn’t go out to a coffee shop, bar, or cigar lounge. My friends all hunkered down in their domestic bunkers and wouldn’t come out. After 6 weeks of feeling sorry for myself I had had enough and decided to backtest / backtest / backtest and journal / journal / journal for 8+ hours per day for 30 days. I backtested the top 2 Futures contracts by volume in each category on the 15 minute chart. (2 metals, 2 indexes, 2 meats, 2 energies, etc.). 300-some-odd trades later, I felt like Neo when he woke up out of the Matrix and saw Cypher looking at all the green gobbledygook on the screens … instead of a nonsense of symbols Cypher told Neo that now he could see “Blondes, Brunettes, and Redheads” in the patterns.

After 300 trades, simulating, backtesting, and journaling, I could “see” the money on the chart… the patterns of cashflow… the areas of value traded by the big institutional traders so I could follow them in their footsteps.

I went from backtesting to forward testing, testing with live data in a simulated account using everything I had learned, and three weeks in a row I had a green week.

And then I went live.

Do this yourself and I promise, it will be like taking the Red Pill. You will never see the Matrix, you will never see the charts, in the same way. Instead of blondes, brunettes, and redheads, you will see opportunities, traps, and the footprints left by the market makers… And we can then *follow* in their footsteps.

I leave you with a screenshot of one of my trades from last week… I hope it will inspire you to do the same. If you are not yet a consistent, profitable trader, learn to “see through the noise’ by journaling.

If you want to see the scene I referenced from the Matrix, click here and enjoy! (And clicking the ‘Like’ and “Share” buttons wouldn’t hurt either if this article was edifying to you!) If you like it, I’ll write some more!

If you want to show off your journaling prowess, leave a comment with a picture!

Trade hard, trade well...