A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
But my answer was that I do not keep a journal. Here’s why.
First, I try to not get too pleased with myself or too discouraged on any one trade. Like a cornerback in the NFL who gets beat by a wide receiver for a long touchdown, I know that I have to get ready for the next play/trade. If I get beat on a trade, I try to evaluate, learn, and then immediately move on.
For example, when I decided to wait one more day to buy Colgate-Palmolive (CL) calls and the stock ripped higher by several dollars the next morning, I was EXTREMELY disappointed! An hour later, I had moved on. I knew that there would be another trade set-up—there always is.
Second, market conditions and correlations are moving too fast these days, and I find there’s little benefit to comparing a trade I made today to a trade I made six months or a year ago. For example, I may have sold a position when the VIX was exploding. Another time, I sold when a stop was hit, and another time on geopolitical concerns. There are just too many variables.
Third, I know the timing of my buys and sells will never be perfect. No one can time the market perfectly. For example, I recently sold my Microsoft (MSFT) April position on the Thursday before expiration. The next morning, the stock received an upgrade, and closed the day $1 higher. I won’t beat myself up that I didn’t have the clairvoyance to see that upgrade coming. Time was running out and I didn’t want to take a gamble, so I sold.
Fourth, I’m able to remember the exact details of every trade I’ve made for years, so I don’t need to write the details down.
Big picture, do what works best for you. You may not be able to remember the details of each trade, so a journal may help you. But I highly recommend not getting too pleased or too discouraged based on the outcome of one or two trades.
Stick to your plan and execute it; over time, I’m certain that your process will be profitable.