Periodically reviewing your trades is probably one of the most overlooked aspects of trading that beginners make. It is also one of the easiest things to do, and is something that can make an enormous difference to your trading. I know it’s not sexy or exciting, like actually seeing your P&L go up and down, but it is really, really important. I can’t stress it enough, but I guarantee most of you reading this, don’t do it. Well, let this be your wake up call.
Screenshots, Screenshots, Screenshots!
Just in case you didn’t get the message from the heading, take some screenshots! This is the first step in recording your trades. Every time you make a new trade, take a screenshot of the options that you traded, the risk profile of the trade, the chart and implied volatility.
Basically anything relevant to the trade.
Then, as time passes, you can take screenshots as the trade progresses so you will have a detailed log of how the trade was affected by volatility and price changes in the underlying and also the impact of time decay. After you done this many, many times for a particular trading strategy, how the trade performs in different conditions will become second nature to you.
Eventually, you will get to a point where you will know exactly how your trade is doing, without having to spend time looking at the greeks and volatility etc.
Another thing that I recommend is to take screenshot before and after any adjustments and also when you exit the trade. When adjusting take, screenshots of the risk graph before and after the adjustment. Also, make notes as to why you made the adjustment and what your plan is for the trade going forward.
Profit Tracking
In addition to taking screenshots and notes as every trade progresses, you should keep a detailed log of all your trades including the profit or loss in dollars and percentage.
Once you have built up a decent history of trades, you might start to see some patterns. Maybe iron condors are your favourite strategy, but upon reviewing your past trades, you notice that you tend to have more success with bearish butterflies.
Only by recording and reviewing your trades in detail will you be able to know what is working well and what isn’t.
Review Your Trades
After logging a number of trades in the manner, it is a good idea to review these trades periodically. At the end of each month makes sense, but it could be every week, or every quarter depending on how often you trade.
Take note of whether you stuck to your trading rules or not. Remember, a losing trade is not necessarily a bad trade if you stuck to your rules / process.
In Summary
It’s not sexy, it takes time, but creating a detailed log of your trades will make a massive difference to your trading. Try it and see! You can get a copy of my trade log spreadsheet by clicking the button below:
I Want The Trade Log Spreadsheet
