You don't need to spend extra money on a trading journal if you already have TradingView.

It can be used as a great visual trading journal and it has a few key benefits over other solutions.

This tutorial will show you the benefits and how to do it.

Advantages of Using TradingView

The biggest advantage of using TradingView is that you can see the before and after charts of your trades. 

This is extremely helpful because a chart may look great in hindsight, but can look a lot less appealing when the trade was first entered.

Another benefit of TradingView is that will store all of your charts in one convenient place that you can access from any computer that has an internet connection.

If you use another method of journaling your trades, like Microsoft Word or something similar, then it can be easy to lose those documents.

TradingView solves this problem.

Create a Journal Entry (Step-By-Step)

The written instructions are provided after the video.

Get a free trial to TradingView here.

To create your first journal entry, open the chart of the symbol that you're going to trade.

Add your favorite indicators and drawings. Be sure to add anything to the chart that is part of your analysis because you'll want to see that information later.

It also helps to mark the profit target/stop loss on the chart, so it's easier to see the results of the trade. 

Document this information before you take a trade.

Once your chart is all set up, click the Publish button in the upper right corner of the screen.

From there, select Publish Idea.

The next screen is for your information only, so do not worry about filling it out “correctly.”

Fill it out in a way that makes sense to you and will make it easy for you to read later.

Write in things like:

• Why you took the trade
• Your confidence in the trade
• Any reservations you have about the trade
• Anything else you can think of

Once you're done, hit the Continue button.

On the next screen, click on Private on the Privacy settings. This will keep your journal entries private so that only you can see them.

You are able to delete private posts, so don't worry about messing things up.

Under Type, select Analysis.

Then select Long or Short under Investment Strategy.

It's helpful to add tags to your journal entry to help you find it later. I suggest using the trading strategy as a tag.

That way, you can simply filter all of the trades in your TradingView journal by simply clicking on the tag link in your profile.

Check the box at the bottom of the window, then click the Publish private idea button.

That's it!

Reviewing Your Trading Journal

To see your saved charts, go into your profile by clicking the icon in the upper left corner of the screen, then go to Profile.

From there, you'll see all of your journal entries.

Click on one of the entries and you'll see a chart.

This is the chart at the time that you decided to take the trade. Analyze the chart before you move on.

Then click the Play button on the right side of the screen to see how the trade played out.

Review all of your trades regularly to monitor how well you are trading and find out if there is any room for improvement.

Conclusion

As you can see, this feature of TradingView is fantastic for journaling trades because you can see the before and after results of all your trades.

In addition, TradingView keeps all of your journal entries in one place, so you don't lose them.

If you want more of my TradingView tutorials, go here.

Get started with a free trial of TradingView here.

You can also trade on the go with the TradingView mobile app. 

The post How to Use TradingView as a Trading Journal appeared first on Trading Heroes.

The key to coming back after a large loss is to stop trading, review your process, then make the necessary adjustments. After you've made the proper adjustments, start trading small before you step back up to your full risk per trade. 

Now I'll break down the details into 7 simple steps that you can follow to do this.

[toc]

Step 1: Take a Break From Trading

A big loss is very stressful and you don't want to compound that stress with more losing trades.

So you need to stop trading and examine why you had such a big loss.

If you keep trading, it's very likely that you'll continue to be frustrated and lose even more money.

It also helps to get out of the environment where you had the losses. So go to a coffee shop or sit out in your back yard while you're doing these steps.

Different surroundings will help get away from the mindset that got you into those losses.

Once you understand why it happened, it will be much easier for you to implement a solution and you can go back to your trading desk with confidence.

Step 2: Accept Full Responsibility

In order for you to improve your results, you'll have to take complete responsibility for your actions.

That means you cannot blame your broker, your computer, or the tip you got on Facebook.

Your results start and end with you. 

The great part is that since you created this problem, you can also create the solution to fix it.

Once you accept that, you're ready to move on to the next step.

Step 3: Review Your Trading Journal

This is the step that most blog posts leave out.

Reviewing your trading journal is the key to figuring out why you lost so much money and how to prevent this from happening again in the future. 

If you don't have a trading journal, see what I currently recommend here.

You cannot figure out the problem if you don't know the cause. And you cannot figure out the cause without looking at the stats on your trades.

Without a journal, you're just guessing as to the source of the issue. For example, you might think that the cause is your trading system, but the cause is actually your lack of discipline.

What if you didn't keep a trading journal at the time of the big loss?

Go back through your trade history and create screenshots of every trade.

Compile stats on all of your trades.

Create notes for each trade. You won't be able to remember everything obviously, but do your best to write down why you entered, exited and modified trades.

Once you have that information, it's time to examine the data closely and identify the problem.

Step 4: Identify the Specific Issue(s)

At this point, you should have a very good idea of why you had such a big loss.

Let's take a look at a few of the most common reasons that traders lose big money.

This list might help you realize a reason that you've missed.

1. Moving the stop loss
2. Taking too much risk on one trade
3. Not having a tested trading strategy
4. Not following the rules of your strategy
5. Taking trades that are not part of your strategy
6. Adding more positions to a trade
7. Not having a written trading plan
8. Trading too many markets/trades at the same time
9. You have to work on your psychology

Write down the biggest reason you had a huge loss. The more specific you can be, the better.

If there are multiple issues, write down the top 3.

Great, now you know the cause of your big loss.

That's half the battle.

Step 5: Develop Specific Solutions

Alright, now I'll give you some solutions to each of the causes listed in the previous step.

Many of these problems are easily solved once you know what they are.

Not Having a Tested Trading Strategy

This is the most common reason for big trading losses.

New traders will take trades without a tested trading strategy.

They will learn a new strategy on YouTube, then immediately jump into trading it in their live account.

I'm not judging because I've certainly been guilty of this when I first started trading.

But how do you know that the strategy is actually profitable?

Are you going to trust the video just because they showed you a couple of well-chosen examples and had some fancy graphics?

Of course not.

That would be like trusting a fancy TV commercial that says a car is super reliable when the car company has only been in existence for 6 months. There's simply no data to back up that claim.

You have to test the strategy to see if it has worked over a long period of time. 

Learn how to backtest in this tutorial. In many cases, you should also forward test the strategy.

Once you have historical data that shows that a strategy as an edge, you'll have more confidence to take trades and you'll know when the strategy has stopped working.

Moving the Stop Loss

This can be a big one for some traders.

They want to give the trade “a little more room,” so they keep moving the stop loss to give the trade a better chance of working out.

I've never ever met a successful trader who consistently moves his/her stop losses.

When you take a trade and set a stop loss, you lock in a fixed amount of risk.

If you move a stop loss, you add more risk to the trade.

Even if you tested your strategy, it won't perform the same if you move your stop loss because you're changing your risk parameters.

The bottom line is that moving your stop loss to create a bigger potential loss is never a good idea. 

So you have to choose if you want to be a successful trader, or you want to move your stop loss and keep experiencing big losses. 

Taking Too Much Risk on One Trade

I call this the “lottery syndrome.”

Traders are so sure that a trade will work out that they risk a large percentage of their account on 1 trade.

They never stop to consider what will happen if the trade doesn't work out.

Remember that if you lose 50% of your account, you'll have to make 100% in profits to get back to breakeven. 

That can be challenging, even for the best traders in the world.

So keep your risk low and either work on having a high win rate, or having winners that are much bigger than the losers. 

Remind yourself that trading is about becoming wealthy over time, NOT getting rich quick.

Not Following the Rules of Your Strategy

Taking trades that are not part of your strategy comes down to a lack of discipline. 

An effective way to change this is to remind yourself of how painful your big loss was.

Really feel it. 

I'm not saying that you should dwell on it. But simply remind yourself of what could happen of you don't follow your system.

Then imagine the opposite.

Picture yourself as a successful trader. See the house you would live in. Visualize the car you would drive. 

Now which life do you want to live?

Do you want to live in pleasure or pain?

Your long-term outcome is the result of every single trade to you take. 

Adding More Positions to a Trade

The practice of pyramiding, or adding to a winning trade, is something that many successful traders do.

But if you get this wrong, it only multiplies a losing trade.

So again, only pyramid if you've tested the strategy.

If you're adding more lots to a trade randomly, then that's a recipe for disaster.

Do not add to winning trades unless you have a profitable strategy without the additional trades. 

Then only introduce pyramiding after you've tested the pyramiding strategy and shown that pyramiding makes the base strategy more profitable.

Trading Too Many Markets/Trades at the Same Time

Having too many trades open at the same time can lead to a loss of focus and a large loss.

This can be very discouraging and lead to a loss of confidence and a downward spiral of losses.

The solution here is simple.

Limit the number of trades you can have open at the same time.

Most traders limit the amount of risk that they take per trade.

You probably do that already.

Now limit the amount of open risk you have at any one time.

Let's say that you want to limit your open risk to 10% and you risk 2% per trade. That means you can have only 5 open trades at any one time.

Using a very simple formula like this will help you keep your risk in check and prevent large losses, especially in correlated markets.

You could also limit the number of trades you can have open, regardless of risk. So maybe you set your limit at 5 open trades.

Doing this will allow to focus on managing those trades and you won't lose a lot at once if they all end up losing money.

It will also help you keep your sanity. 

Not Having a Written Trading Plan

Having a written trading strategy is essential to success.

When you're trading multiple strategies, or you've tested many trading strategies, the lines between the strategies can become blurred.

It can be easy to forget the rules of the strategy you're trading live.

Therefore, having a written trading plan is essential to maintaining consistent results.

If you forget your rules, you can always reference your plan.

You'll also be able to see if you followed your trading plan or not, when you review your trading journal.

If you don't have a written trading plan, you can download the free PDF worksheet here.

You Have to Work on Your Psychology

Now what if you know what to do, but you cannot seem to do it? You find yourself entering random trades, when you know you should follow your rules.

Then the issue is with your psychology.

This is a very deep subject and is beyond the scope of this tutorial. But if you want detailed information on how to change your psychology, read these posts.

I also wrote a comprehensive article on how to explore and upgrade your deepest psychology here.

Hint: Your BIGGEST trading gains will always come from working on your psychology. 

Step 6: Start Trading Again, But Keep It Small

Once you have a plan in place, now it's time to ease back into trading.

I would suggest starting small and working your way back up to your full size.

It's like an athletic injury.

Let's say that you hurt your knee playing basketball.

You aren't going to start playing basketball at full speed right after recovering from your injury.

The smart thing to do is to ease back into playing.

Then once you're confident that you're fully healed, you can start playing all out again.

In trading, the equivalent is to trade a fraction of your normal trade size.

For example, let's say that you usually risk 2% on every trade.

While you're getting back on your feet, consider only risking 0.5% per trade.

Once you get your confidence back, then you can go back to risking 2% per trade again.

Step 7: Continue to Track Your Results

Once you're trading profitably again, your job is not over.

Continue to journal your trades keep an eye on your performance.

Review your performance on a regular basis, whatever makes sense for the way you trade.

If you trade frequently, then review your journal once a week.

Don't trade that often? Then a monthly review is probably enough.

When you stay on top of your results, you'll be less likely to make the same mistake that led to your huge loss.

Final Thoughts

Recovering from a large trading loss is all about reviewing your process, making adjustments, then slowly getting back into trading your full size.

There can be a lot of shame and frustration that comes with losing a big chunk of your account.

But if you can detach yourself from those negative emotions and objectively review your results, you're very likely to find the solution. 

Keep going!

The post How to Recover After a Huge Trading Loss appeared first on Trading Heroes.

Well, you could risk more per trade.

But that doesn't work for everyone.

Another way to do it is to let your profits run longer.

But how do you determine the best place to set your take profits?

That's not always easy to quantify.

A data-driven way to figure this out is to use the MaxR metric. 

I'll explain it in this video. If you prefer the text version, it is provided below this video.

Note: This only helps if you have a strategy that is already consistently profitable and you want to explore if there is a way to increase your profit per trade.

If you don't have a profitable strategy yet, start with our guide on how to choose the right trading strategy for you and our backtesting guide.

MaxR Optimization Explained

MaxR measures your maximum theoretical profit on a trade, if you didn't move your stop loss or set a take profit.

This is the ultimate “what if” scenario and it can show you how much money you are potentially leaving on the table.

Let's take a look at MaxR on a chart…

If you went short at the first orange line at 1.21609, then you might have been happy with an easy 2R profit.

But you also would have missed out on all of the profit down to the second orange line (MaxR).

Now it's generally not a good idea to give into FOMO (fear of missing out).

However, in this case, it can be useful to measure these moves after your trade was closed out, to see how much profit you could have bagged on the trade.

Compile MaxR stats on your trades and you may start to see potential optimizations.

Let's say that you have been targeting a 1R profit target and have been winning about 60% of your trades.

If you look at the data however, targeting up to 2R would only lower your win rate by about 2%, but it would double your profit.

If you targeted 3R, you would still have a decent win rate and you would triple return on each trade.

Keep in mind that before you make any trading decisions, you should have a lot more trades than in this example. 

…and you should backtest any changes, before trading them in your live account.

But this shows you how MaxR analysis can help you make more per trade.

MaxR is a metric that I came up with, but you can get a similar result by using Maximum Favorable Excursion (MFE).

You can find trading journals that show you MFE here.

How Do I Determine a Maximum Move?

Obviously, there is some discretion involved when determining the maximum move on each trade.

…and you will never be able to get anywhere near hitting the maximum profit on every trade.

But for the sake of MaxR analysis, there are two ways that you can determine your maximum move:

1. Eyeball it (more for right-brain dominant traders): Take a look at the chart and ask yourself where you would have realistically closed the trade.
2. Use a formula (more for left-brain dominant traders): You could say that you will get out of a trade if the trade retraces more than 2R. Or you can use a moving average or a X-bar trailing stop. Regardless of what you decide to use, keep it consistent.

If you really want to geek out about trading strategy optimization, consider reading this book, or learning how to code in Python.

Conclusion

So that's how MaxR can help you stretch your profits on every trade.

This is by no means a magic bullet.

You may compile the data and find that you already have the optimal exit point.

If this is the case, then great! Knowing this will give you more confidence in your strategy and make it less likely that you will suffer from FOMO.

It might even give you JOMO (joy of missing out) because you know you are already trading an optimal exit.

Give MaxR a try, you might be surprised at what you discover.

If you tried MaxR, what did you discover? Let us know in the comments below…

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The post How to Increase Trading Profitability with the MaxR Metric appeared first on Trading Heroes.

I've written about both MFE and MAE (maximum adverse excursion) in detail here, if you aren't familiar with the terms.

But there's one trading metric that I haven't seen in any trading journal.

…and it has helped me a lot.

I call it MaxR.

It's part of my Advanced Trading Metrics Tracking.

So in this post, I'll go over why you might want to track MaxR and how it can be used with MFE, to help you improve your trading edge.

Definition of MFE

The maximum amount of money you could have made, while the trade was open.

MFE is very useful because it can help you see if you are doing any of the following:

• Letting your trades run longer than they should
• Not locking in profits quickly enough
• Setting your profit targets too far away

For example, this trade was stopped out shortly after entry. But the trade was in profit for some time before getting stopped out.

The MFE is marked on the chart below.

If this happens to you a lot, then you should consider setting your profit target a little closer to your entry to capture more profits.

To see MFE in your trading journal, check out these trading journal solutions.

But MFE only measures your missed profit, while your trade was open.

That's very useful, but it's only half of the story.

This is why you also need MaxR…

Definition of MaxR

The maximum amount you could have made on a trade, during and after your trade, if you did not move your stop loss.

Essentially, you want to understand what the ideal scenario would have been on your trade, if you just left the trade alone.

For example, you may have initially been happy with the result of the trade below because it hit your take profit quickly.

But upon later review, you notice that you missed out on a ton of profit.

This was the MaxR on the trade. The “R” stands for Multiple of Risk or the result of the trade, relative to your stop loss.

The MFE on this trade would have been 100% because it hit the profit target. MFE is a good stat to track, but it doesn't tell you how much profit you are missing out on after you close the trade.

MaxR gives you this vital information. In this example the missed profits were quite significant.

Now there's a reason why most trading journal platforms don't include this information.

MaxR can be very subjective, so it's hard to calculate automatically. 

MFE and MAE are much easier to calculate.

For example, would you call exit A your MaxR level, or is exit B the correct MaxR level?

Well, that really depends on your trading strategy and personality. If you are a shorter term trader, then exit A would be used to determine your MaxR. Longer term traders might opt to use exit B.

Also consider how much of a retracement you are willing to endure. Would you bail on a trade if price moved back to breakeven?

I think most people would. So in that case, you would measure your MaxR before price moved back to breakeven.

The bottom line is to ask yourself if you would realistically leave a trade open for that long.

If yes, then that is your MaxR level.

Here's a video explanation of MaxR…

How MaxR Has Helped Me

There is a trading strategy that I use, which I abbreviate CPD.

But it doesn't matter what the actual strategy is. The point is that I was tracking MaxR in my trading journal and I noticed that over 90% of my winning trades had a MaxR of more than 2P.

Here's an example entry from my Evernote trading journal. The first number at the end of the line is my actual P result and second number is my MaxR.

So I started targeting at least 2P on every trade and it has worked out well ever since. With this strategy, there's rarely a time when I get less than 2P on a trade. Price usually either goes to at least 2P, or I get stopped out.

In the example above, I would have gained an extra 53.8% profit on the trade, by moving my take profit to 2P.

…but I probably wouldn't have known to do this if I didn't track my MaxR. 

The Dark Side of Tracking MaxR and MFE

The benefits of tracking MaxR and MFE are great, but there is also a potential downside.

There can be a tendency to continually adjust your exit points to try and optimize your MaxR and MFE.

Precise optimization sounds like a great idea, but it's usually a recipe for disaster. 

Don't fall down that rabbit hole.

Remember that trading is not black and white. It's shades of gray.

To avoid over-optimization, only review these stats after every 50 trades. Is there a clear trend, or are the results all over the place?

If there isn't a clear benefit to changing your trading strategy, then don't. Keep tracking though, you may need more trades to see a pattern.

Check back after another 50 trades. 

When in doubt, don't change your strategy. 

These metrics are helpful, but they don't always yield actionable results.

When to Track MaxR?

To get the full benefit of MaxR, I believe that you should track it on every trade you take.

If aren't familiar with the types of trades that I recommend tracking, they are:

• Live trades
• Demo trades
• Backtesting trades
• Missed trades

The more data points you have, the better your chances of spotting a way to improve your results. 

Conclusion

If you consistently see that your MFE and MaxR are showing a good profit, but you fail to capitalize on a majority of these opportunities, then it might be time to rethink your exit strategy. Measure your MaxR on every trade and look for patterns in the data.

Also consider splitting up your trades into two parts. You can target your smallest MaxR number to lock in some profits on the first position. Then target a bigger multiple of risk to maximize your gains on the second position.

These simple stats can help you turn a breakeven strategy into a profitable one, and make an already profitable strategy even more profitable.

Track your MaxR and find out if you're leaving money on the table.

The post MaxR vs MFE: Why You Need Both appeared first on Trading Heroes.

Advanced Risk Multiple Tracking can uncover some powerful ways to improve your trading strategies.

This guide will show you how to do this simple analysis and the hidden issues that it can help you identify in your trading.

If you are already familiar with the concept of Risk multiples, skip down to the next section.

I've found this analysis super useful, so I would encourage you to do it too.

The best part is that you might only need to do this once to get the benefits.

Alright, let's dive into it…

[toc]

What is a Risk Multiple?

If you are not familiar with the term risk multiple, it was popularized by Van Tharp, as a way to measure the outcome of a trade, based on the amount risked.

Of course, this assumes that you use a stop loss, which you should always use when you take a directional trade.

The amount you risk on a trade is always 1R. 

So if you risk 100 pips on an EURUSD trade, 100 pips is your 1R for this trade.

If you risk 54 pips on the next trade, that's 1R for that trade.

The Position tool in TradingView makes it super easy to measure Risk multiples on your charts.

If you have a profit target at 200 pips with 100 pips of risk, then your potential reward on the trade is 2R.

Traders also call this the Risk/Reward Ratio.

(Yeah, it's technically a Reward/Risk Ratio)

A risk multiple makes it really easy to see your performance, relative to your risk.

Percentage return or net pips can be very misleading because they hide the amount of risk that you are taking to get your results.

Your risk multiple has an inverse relationship to your win rate.

If the win rate of your trading strategy is high, you will probably have a low risk multiple.

If your win rate is low, then you will need to have a high average risk multiple per trade to make money.

Of course, a high win rate and a high average multiple is ideal, but it doesn't work that way.

There are always trade-offs in trading and you need to find the best balance for your trading method.

Many traders track the risk multiple of their wins and losses.

That is fantastic and doing this will give you much more insight than just tracking your win rate.

But we can do better…

What is Advanced Risk Multiple Tracking?

Tracking the maximum risk multiples of your trades can give you even more clues as to how you can optimize your trading.

This is Advanced Risk Multiple Tracking.

If you start tracking the following advanced R-metrics, elements of your trading that you can improve on often become crystal clear. The best part is that now you also have an objective way to measure your improvement in these areas.

It's not necessary to track all of these metrics, so figure out which ones will help you and throw out the rest.

Look for trends over time because something that only happens once could just be a fluke.

Also remember to apply these metrics at the trading strategy level.

Each trading strategy will require different optimizations.

Keep in mind that this method is to be used alongside your regular trading journal.

Alright, here are the advanced R-metrics that you can track to start optimizing your trading…

Risk Multiple Tracking for Winning Trades

The obvious R-metric to track here is the average risk multiple of your winning trades.

But that has limited use.

So let's step it up a level…

Maximum R During Trade

Tracking your maximum risk multiple during each winning trade can show you if you are chickening out and closing trades too early, or if you are closing out too late and need to set a hard profit target. 

This is also known as Maximum Favorable Excursion or MFE.

To measure this, track the highest risk multiple that each trade could have made, before you closed it.

Then calculate the average over 30 trades or more.

If this number is greater than the average risk multiple result of these trades, then figure out why this is happening.

It could just be a natural function of your strategy. This can often happen with trend trading strategies.

But it might also be an opportunity to optimize…

For example, let's say that you have 80 winning trades with an average of 1.4R profit per trade.

But when you go back and do a “maximum R before close” analysis, you find that these trades have an average potential of 2.6R.

Now you can ask yourself some key questions:

• Am I closing these trades before they hit the profit target?
• Should I be setting a 2R profit target instead of exiting manually?
• Can I use multiple positions to try to capture this extra profit?

Then you can start to experiment with your strategy in backtesting and/or forward testing to see what effect these changes might have. 

Maximum R After Trade Closed

I believe in doing a follow-up review of all my trades, a week or more after they close.

This allows me to review them more objectively because my emotional attachment to them has dissipated.

A follow-up review also allows me to see how much more money I could have made on each trade.

Duh, nobody can get the maximum R out of every trade.

But if my average potential R per trade is much higher than my actual R return per trade, then I am leaving money on the table.

If I know this, I can review my trading strategy and figure out if there is a way that I can extend my profit targets or use multiple profit targets.

It might not be possible to do so and still remain profitable. But if you know this, you can at least explore ways to improve your return per trade. 

Risk Multiple Tracking for Losing Trades

OK, let's start with the elephant in the room…

If your average risk multiple for losing trades is greater than 1R, then you have a huge problem. You are moving your stops and that needs to…stop.

But if you notice that your losing trades could capture 1R or more before hitting the stop loss, then you might want to look at your exit strategy.

You may be setting your profit targets too far away or you could benefit from using multiple positions.

Again, test these ideas and see if they improve your results.

Risk Multiple Tracking for Breakeven Trades

Tracking the maximum risk multiple on your breakeven trades can show you if you are exiting at breakeven too quickly.

To get this metric, track how much of that sweet R you could have made if you didn't move your stop to breakeven or if you didn't manually exit at breakeven. If this average is consistently higher than 1R, then you should probably look at your rules on moving your stop to breakeven or how you are manually exiting your trades.

Risk Multiple Tracking for Missed Trades

Finally, it helps to take a look at the potential R-return that you could have made or lost on your missed trades.

Yeah, yeah…I know what you are thinking…

There can be some hindsight bias when you look at missed trades.

But I would argue that hindsight bias only comes into play if you don't have a well-defined trading plan.

If you scroll your chart back to the entry point and it looks like a trade that fits your criteria, then you need to be honest with yourself and make the call on if you would have taken that trade or not. 

Tracking the risk multiples of missed trades can help to build your confidence…or expose potential weaknesses. 

If you lost -2R this week, but you had +5R in missed trades, then you are on the right track.

You just have to figure out how to stop missing those trades. This can be a huge confidence booster, especially during a rough week.

On the other hand, if you had a +3R week, but you had -10R in missed trades, then you may have been lucky and dodged a few bullets.

I certainly wouldn't stress it if this happens once in awhile.

But if this becomes a trend, then you need to examine why this is happening.

….or you could have a ticking time bomb on your hands.

How to Track Advanced Risk Multiple Metrics

I use Evernote as my trading journal because it's stupid simple and almost as flexible as a yoga instructor at a Twister party.

Tracking custom metrics like advanced risk multiples is a breeze.

If you put this information in the titles of your journal entries, you can see your risk metrics at a glance.

You can use tags to filter by trading strategy, win/loss, currency pair and any other category you want to create.

Of course, to get exact averages, you would have to use a spreadsheet.

But sometimes eyeballing can be enough to understand where you can make improvements.

 

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A post shared by Hugh Kimura ?? (@tradingheroes) on Aug 31, 2018 at 8:42pm PDT

Conclusion

Beware of trying to over-optimize. Some things simply cannot be optimized with this analysis.

However, advanced R-metrics are super easy to calculate and can be a quick-and-dirty way to figure out how you can improve your trading.

You are simply looking for clues that you will need to stress-test. 

If you haven't done this analysis before, give it a try right now. You might be surprised at what you uncover.

The post How to Use Advanced Risk Multiple Tracking appeared first on Trading Heroes.

Let's face it…

If you are trading a manual trading strategy, you will miss some trades. That's just how the game works.

However, what if those missed trades also contained some valuable information that could help you make more money?

A treasure chest, hiding in plain sight, if you will.

Well, then I'd say that it's probably a good idea to pay attention to them.

Journaling my missed trades is an exercise that I have found helpful when learning a trading strategy, so I wanted to share it with you.

Keep in mind that once you have mastered a trading strategy, you probably won't need this exercise anymore.

But I have found that it's a great way to speed up the process of learning and optimizing a trading strategy. 

It is meant to be used alongside your current trading journal. If you don't have a trading journal, see my current favorite journals here.

In this post, I'll give you the video guide on exactly how journal your missed trades and give you the top 5 ways that journaling your missed trades can improve your trading.

You might be thinking that his exercise is a waste of time and I totally understand why you might feel that way.

I would have said the same thing a few years ago.

All that I ask is that you keep an open mind and this post might just change your mind. I'll also talk about why hindsight bias doesn't matter, if you are doing this exercise correctly.

Before I dive into the guide, let's take a look at the top 5 ways that a missed trades journal can improve your trading.

1. Figure Out How to Stop Missing Trades

This is the big one.

If you are missing out on profitable trades that fit your trading plan, then you need to figure out why.

Your trading career depends on it. 

Yes, there might not be any way to take those trades.

But then again, there might be. So you owe it to yourself to explore if it's possible.

Here are some ways that you can reduce the number of high quality setups you miss:

1. Create alerts on your trading platform to signal you of a possible trade entry. If you don't know how to do this, find a programmer to help you.
2. Maybe you need to be trading at different times. Your best setups may be occurring during the New York session, when you are currently trading the London session.
3. Use automation to take the trades for you. Remember, you don't have to go fully automated. You can use Incremental Automation to automate parts of the process. To find a programmer to help you with this, see our directory.

2. Practice Your Setups

Learning to trade well is all about practice.

Period.

That's why backtesting is so effective. You get in a ton of reps, without having to wait for the live markets.

Keeping track of your missed trades is yet another opportunity to practice your trading strategy.

If you want to get all the practice possible, journaling missed trades is a great way to do that. 

3. Discover New Optimizations

When you log your missed trades, you grow your library of reference material on a particular trading strategy, for you to go back and review later. This has several potential benefits when optimizing your strategy.

Here are a few questions that you can possibly answer with your library of trade setups: 

• How long does it typically take for price to move into profit after I take a trade? Understanding this can help you cut a losing trade sooner.
• How much profit do I leave on the table? Find out if you are missing out on a ton of profit after you close your trades and work on a way to take advantage of these moves. You might consider extending your profit target, using a stop trailing method, or using an 80/20 split exit.
• Does price frequently retrace after I typically take a trade, possibly giving me a better entry? I believe that fine-tuning your entry is more important than having a good exit. If you can tighten up your stop loss, that's the easiest way to increase your R-multiple.
• What do my losing trades have in common? When you journal missed trades, you also need to journal losing missed trades. This can help you spot patterns in your losing trades and correct them.
• Are there certain times of the day that are better for taking trades? Do you lose more during the Asian session than in the London session? Well, then that's a really easy fix.
• And more! What other questions could you ask about your trading strategy to improve the returns?

If you want to create an even larger library, consider creating Flash Cards of your backtesting trades.

4. You Might be a Much Better Trader Than You Think

Getting down on yourself for losing trades is one of the deadliest things that can happen to your trading account balance. This can lead to overtrading, mismanagement of trades, quitting and a Pandora's Box of not-so-fun ways to lose money.

So learn to forgive yourself.

It's your secret weapon.

Aside from that, journaling missed trades can boost your confidence by showing you that you might be just one or two tweaks away from consistently profitable trading.

For example, let's say that you lost 2% last week.

Bummer.

But when you go back to your missed trades, you find that you missed 3 winning trades that you would have taken for sure.

This would have made you 3% profitable on the week.

Now you can go back and figure out why you missed those trades and possibly figure out how to prevent yourself from missing more trades in the future. Even if you find that it was impossible to take those trades (because you were sleeping, on vacation, etc.), reviewing your missed trades can give you the confidence that you are on the right track.

You might just need to keep taking trades and letting your edge work for you. 

5. Find Out if You are Getting Lucky

In all fairness, you might also be a worse trader than you are currently getting credit for.

You could be benefiting from the luck of the draw over the short term, and could be headed for a big drawdown later.

Journaling your missed trades can help you identify if you have been lucky, or if you really do have a legit trading strategy.

If your live or beta trading results are profitable, but you find that your missed trades would have led to a lot of losses, then ask yourself why that is. There might be a perfectly good reason why you are skipping these losing trades.

But if you cannot find a good reason, then your trading strategy that could be a ticking time bomb that is waiting to take a big chunk of your trading account with it.

Best to find that out before it happens. 

What About Hindsight Bias?

The first objection that usually comes up when it comes to missed trade journaling is that hindsight bias will cloud your judgement. Therefore you would not be able to make objective calls on which trades you would have taken and which ones you would have passed on.

Yup, that's a fair statement and there isn't a way to completely counteract hindsight bias because you already know what happened. However, try to remain as objective as possible and use these two techniques to shield yourself from hindsight bias when journaling missed trades.

Scroll Back

Before you tag a trade as a missed trade, scroll your chart back to the point of the setup. When you hide the information after the setup, you are now at the “hard right edge” or the point where you need to make a trading decision.

Go or no go?

If the setup doesn't look so good at that point, then you probably wouldn't have taken the trade.

Have a Specific Trading Plan

But what if you still have difficulty deciding if you should take the trade or not, even when you scroll your chart back?

Then your issue is probably that your trading plan isn't specific enough. Go back to your plan and see if you can make your entry more specific, so there is no doubt if you should take a trade or not.

Yes, that's not always possible, especially with highly discretionary strategies. But give it your best shot, it could be the step that takes your trading to the next level.

How to Journal Missed Trades

Make this process as easy and pain free as possible.

Serious.

This is yet another thing that you will have to do each week, so make it simple and dare I say it…even fun. This video will show you exactly how to get started.

I use Evernote, but feel free to use what works best for you.

Conclusion

So that is why it's helpful to journal your missed trades and the simplest way that I have found to do it.

Does this sound like too much work?

Well, I hate to break it to you, but learning to trade well is just like any other profession. You have to put in the work to get the results. Just ask any successful trader.

Now get to work

The post 5 Reasons to Journal Your Missed Trades Too appeared first on Trading Heroes.

This is a concept that I've been experimenting with for awhile and I finally have a workflow that works well and that I'm confident in sharing.

It has helped me tremendously.

I haven't seen anyone teach this, so I hope that this technique helps you improve your trading too. 

I've heard a few successful traders use this technique (or something similar) to become consistently profitable and that is what led me to explore it.

But oddly enough, they don't teach it in their courses.

Or they don't have a course, which is unfortunate because nobody will learn strategies like this.

Now, full disclosure up front…this is NOT sexy.

It's hard, embrace the suck, work.

But if you are at a point in your trading where you need to figure out why you aren't getting the results that you are looking for, then trading Flash Cards could be one of the missing links that pushes you into consistently profitable trading.

They can help you identify chart patterns that you're looking for.

This method is meant to be used in conjunction with a trading journal.

How Traders Learn to Spot Profitable Patterns

First, I'll give you a quick background on how profitable trading is typically learned.

You probably already know this, so I'll be very brief.

I only mention these concepts to show you how Flash Cards can speed up what already works.

1. Watch a Live Market

Retail traders who log a lot of live screen time and only focus on one or two strategies will usually do much better than traders who do not put in the screen time.

But the learning process will be slow, especially if you are a swing or position trader.

This is because you are not getting feedback fast enough. The more high quality feedback you can get right now, the faster you will progress.

2. Do Trading Simulations

Using a trading simulator like NakedMarkets can speed up your learning time dramatically.

If you have never backtested before, read this guide to get started. As you can see, you can learn so much more in the same amount of time.

When you want to practice your trading strategy, you can simply fire up NakedMarkets and run through some trades.

This is a great activity to do when you don't have any potential trades in play, or the markets are closed.

How Flash Cards Can Speed Up the Process

Now, what if you could put your trading simulator on steroids?

That would be Flash Cards.

First of all, there is no substitute for live chart time and doing backtesting in a trading simulator.

You need to figure out if your strategy works in backtesting.

If your method doesn't have positive expectancy, then Flash Cards won't help you.

Also, you obviously have to get used to executing in live market conditions.

But once you have a trading strategy that meets your goals in backtesting, then it's time to become an expert at it.

That's where trading Flash Cards can help.

Here's where it fits into the Trading Heroes Roadmap:

1. Learn a trading strategy from a website or course.
2. Create a Trading Sketch using this worksheet.
3. Backtest your Sketch on as many pairs that you will trade live.
4. If you like the results, begin forward testing it in a demo account.
5. Now it's time to create Flash Cards…

How to Setup Your First Flash Card Deck

Once you have a trading strategy that backtests well, Flash Cards will help you etch a good setup into your brain.

It can also help you improve your strategy because you might start to see optimizers that you may not have noticed before.

Here's how to do it…

Step 1: Put All of Your Backtesting Trades Into One Spreadsheet

If you are using Forex Tester, then simply export all of your trades and paste them into one spreadsheet.

I suggest using Google Sheets so you don't have to worry about your hard drive crashing and so you can access your spreadsheets on any computer or mobile device.

The same goes for any other backtesting method out there.

You can even use TradingView Bar Replay for backtesting and put your trades into a spreadsheet.

Using a spreadsheet may seem a little old school, but trust me, it's the most reliable and flexible solution out there.

It allows you to test most “what if” scenarios later, without doing any custom programming or being restricted by the limitations of an analytics platform.

Step 2: Create a New Google Doc

Now create a new Google Doc. This is where you will store your Flash Cards for each trading strategy and version.

I believe in versioning your backtesting, so you know exactly how one change affects your results.

Again, a Google Doc is not sexy, but it's easy to use and reliable. You can also use something like Mac Pages.

Step 3: Screenshot Winning Trades Only

Here's the thing…

You could screenshot every trade, both winners and losers.

But that could take a really long time (especially if you have a low win rate) and I feel that it's unnecessary to review losing trades.

Here's why…

Only reviewing winning trades does three things:

1. Shows you what a winning setup looks like.
2. Saves you time by not having to document losing trades.
3. Helps you overcome the innate negativity bias that most people have. I learned this concept from Chris Capre and it helps a lot. The “wolf” you feed is the one that survives…

A post shared by Mike Wolfe (@mikewolfeamericanpicker) on May 16, 2018 at 7:30am PDT

For each trade, you need three screenshots:

1. When the trades sets up. Having this chart helps you avoid hindsight bias.
2. When the profit target is hit or when you decided to exit.
3. How much additional profit was available after you closed the trade. This can be very important for optimization later. I express this in multiples of initial risk. I usually wait for the initial stop loss to be hit to determine total potential profit.

When creating a screenshot, mark four things:

1. A vertical arrow where the trade set up. This allows you to easily see the entry point in subsequent screenshots.
2. The stop loss level (red line).
3. The entry level (blue line).
4. The take profit level, if applicable (green line).

Now go through your backtesting spreadsheet and create a screenshot for every winning trade.

You can set Forex Tester on the fastest setting because you already know the date that you want to get to.

Be sure to include as much history on the chart as possible, so you have some context on previous price action.

This helps a lot with optimization and practice later. Add screenshots from multiple timeframes, for better context, if needed.

Add the date to each screenshot study, so you can easily go back later and insert other trades that you missed.

A key to creating useful cards, is to use the same screenshot format for every single trade.

This allows your brain to focus only on seeing the setup and not be distracted by different screenshot formats.

When to Review Your Flash Cards

Here's when I use my Flash Cards:

1. When I want to practice a trading strategy –  I review my cards at least three times a week, to keep my setups fresh in my mind. This is much faster than manually running through Forex Tester to practice. Kobe Bryant used to come to his games four hours early, to warm up. The best become the best because of continuous and mindful practice. We need to establish similar routines.
2. When I have doubts about an entry signal – There can be days when I'm feeling a little off and going back and forth on if I should take an entry signal or not. That is when I look through my cards really quick to see if my current trade looks like previous successful setups.
3. When I want to optimize a trading strategy – If I want to do things like tighten my stop loss to improve my entry, or figure out how to get more return out of my trades, I turn to my trading Flash Cards. When you look at trades in quick succession, it quickly helps you spot patterns.

You may choose to use Flash Cards in other ways. But this is what works for me. Here's an example of it in action…

A post shared by Hugh Kimura ?? (@tradingheroes) on May 26, 2018 at 12:22am PDT

Final Thoughts on Trading Flash Cards

Yes, this can be a lot of work. However, investing a little time now, actually saves you a lot of time later.

Having a spreadsheet also allows you to add the potential risk multiples (R value) available on every trade to do some Advanced R-Multiple Analysis.

For example, maybe you target only 1R on your current trades, but you see that your average R available was 8R.

That gives you a clue that maybe you can increase your profit target to improve your profits, without having to test different intermediate profit targets individually.

The post Trading Flash Cards: How to Speed Up Chart Pattern Recognition appeared first on Trading Heroes.

UPDATE (Nov. 13, 2022): This is one of my older posts and since I wrote this, I've found much better trading journal solutions. You can see my current recommendations here. But this should still work.

So an Evernote trading journal isn't working for you?

Pen and paper not doing it either?

Well in trading, there is usually more than one way to skin a pip.

You just have to be open to new ideas.

If you have been having trouble finding a good journaling solution, then this blog post might be just what you have been looking for.

Journaling is a vital part of successful trading. You cannot expect to get better if you do not know what you are doing wrong.

It's the reason why NFL players watch game tape. It's why 11-time world surfing champion Kelly Slater reviewed all of his contest results, when he wasn't winning.

Did you know that Trello can also be used as a free Forex trading journal?

This is a great video on how to do it, by my friend Omar. I met him at the Truth About FX Conference in London.

You can learn from him and other friendly traders inside the Naked Forex Now forum.

If you prefer the text version, it is provided below the video.

…and he shows you a cool way to add Loom into the mix too.

How to Create a Trading Journal with Trello

Let's start with Trello.

It's a tool that is popular with development teams, but it can also be a great way to organize your trading journal.

The first step is to sign up for a free account at Trello.

Once you are in, create a new board.

Call it “Trading Journal” or if you can think of something more creative, feel free to have at it.

Click on the Create button and you are ready to start journaling your trades.

Now that you have a brand spanking new board, it's time to decide how you will organize your journal.

There are a ton of ways that you can customize your trading log, but here are a few tips.

It will usually help to create a new board for every year, like Omar does in the video.

This is true, even if you are a longer-term trader or a short-term trader.

This is a good set of lists that you can start with:

• Performance by month
• Open positions
• Pending orders
• Watch list
• Closed trades by month
• Discarded trades

Experiment with different configurations and figure out what works best for you.

Trading Workflow

The cool thing about Trello is that you can create a “card” for every trade idea.

Then you can move that card through the the entire workflow process and document it's progress at every step along the way.

You would move an idea that actually becomes a trade, like this:

1. Watch List
2. Pending order
3. Open positions
4. Closed trades

If a trade idea did not materialize into an actual trade, then you would simply move the trade from the Watch List to the Discarded Trades board.

This is very useful because you can see which trades would have worked out and which trades were a bust.

When you look back on these discarded trades, you can start to fine tune your ability to spot great trading setups.

Now that you understand the overview, let's take a look at how this would actually work.

You would start by creating a new card in the Watch List list.

For the title, I would recommend starting with the date, then the currency pair.

If you want to include the setup, that could help you identify the trade too.

Then write in some notes and the timeframe that you are looking at.

Every time you move the card to a new board, you will add a comment to the card. It might look something like this.

Obviously, you would probably want to be more detailed that I was in the picture above.

But that was just for demonstration.

Custom Background Picture

Oh, and if you want to create a custom background, like in the video, then go to Show More in the upper right corner of the screen.

Then click on Change Background and you can choose a new photo or a solid color.

If you want a cool picture for your background, then Pexels or Unsplash are great places to get free photos.

How to Document Your Trades with Loom

Alrighty…now that you understand how to use Trello,

Loom is a great way to create screenshots and video notes.

Why do you need video notes?

Well, you don't absolutely need video notes.

However, videos do give you one very important piece of information that you cannot get from written trading journal notes. 

…how you were feeling at the time you entered the trade.

You might write that you were feeling good about the trade.

But your voice might say something different.

I can see that you are still skeptical.

Well then, do this…

Install this simple plugin in Chrome, then video journal three trades.

Just three trades. 

Then go back to those videos a week later and see how valuable you think they are. If they work for you, then great!

Keep doing it.

If not, then stick to the text journal.

It's all about finding what works for you.

How to be Sure That You Actually Maintain a Trading Journal

Now that you know how to use Trello and Loom to maintain a trading journal, that's the easy part.

The hard part is actually doing it. 

These three tips will help. But the bottom line is that you need to make the process as simple as possible.

So start small.

For certain personality types, there can be a tendency to be too detailed, when writing entries in a journal.

Then they never get started because they want everything to be perfect.

If you are like that, then just start by writing down a few notes after the trade has closed.

If you are on the opposite end of the spectrum and aren't detailed enough, but usually just get started right away, then you can probably start by journaling the trade through the entire process.

Keep each comment short and go from there.

If you have a lot of trades a week, start by journaling just one trade a week.

Conclusion

A trading journal is key element of successful trading, but not enough traders do it properly.

Once you can go back and review what you are doing wrong and what you are doing right, I think you will find that your trading will start to progress much faster.

One reason for not journaling is that we don't want to face our mistakes.

It can be painful to admit to ourselves that we are not good traders.

It can be painful to think that we lost money.

But the obstacle is the way.

With all the great free tools out there, like Evernote, TradingView and Trello, you have no excuses.

So get started now.

The post How to Setup a Free Forex Trading Journal with Trello (and Loom) appeared first on Trading Heroes.

It is a lot more fun to take trades and make money, right?

Or at least that is what I think…

Believe me, I know.

I fought a trading journal for years.

But you cannot make money consistently, if you do not know what you are doing well and what you need to improve on. 

Therefore, trading won't be much fun without a journal.

So in this post, I want to help you create a journaling process that you will actually stick to and use for the rest of your trading career.

As with many things in life, a minimalist approach often works best.

You can always add things later.

To see my current recommendations for the best trading journal solutions currently available, go here.

Step 1: Ruthlessly Simplify Every Single Step in the Process

The first key to successful journaling is to identify every step in the journaling process and simplify it to the bone.

Chop everything you possibly can.

…and yes, a can of PBR can help with this.

So before we get into actually how to create a journal entry, let's take a look at each component and what you need to do to almost guarantee that the process is as painless as possible.

Recording Trade Details

This is where most trading journals fail miserably.

They expect you fill in every detail of the trade manually.

On top of that…they ask you to fill in some other stuff that you may or may not need.

Do you really need your MFE and MAE? Probably not.

But here's the kicker…

As traders, we also think that we need all this information.

That this was the case for me.

But every time I had to fill out my trading journal, it caused me so much stress because I had to fill out 50 different things for every trade.

There is a better way. 

I'll show you what to do in Step 3.

Trade Less Until Your Journaling Capacity Can Catch Up

If you have 100 trades a week and zero trading journal entries, then it is time to stop for a minute and balance that out.

To improve your trading, you need to review your trades. Trading alone will not help you progress.

So take fewer trades and make sure that you can easily journal them all. 

Don't worry, the journaling process will get easier. Then gradually increase your trades until they match your journaling capacity.

If you want a completely automated trading journal system that automatically downloads your trades from your broker, check these out.

Don't Overthink It

The goal is to have the least amount of information in your trading journal, for it to be effective.

So don't start with a “what if I need this” attitude.

Start with a “what is the minimum I need” mentality. 

I think most of us naturally geek out on anything trading related, only to realize later that it was mostly mental masturbation.

Keep it simple and move forward quickly.

On that note…

Use the Right Medium

So…everyone (including me) is telling you to use an Evernote trading journal. But what if that doesn't work for you?

Then don't frickin' do it. 

I've seen hedge fund managers print out their trades on paper, write a few notes on them and put them in a box, so they can review them later.

…and it works for them. They are managing millions of dollars successfully.

So do what works for you. Find something that is simple, effective and is relatively painless.

2. See the End Goal Clearly

I think many traders overlook this point. Ask yourself why you are journaling.

No, seriously.

Your only answer should be:

To see when I am trading well and how I can improve.

Nothing else. 

In order to reach that goal, you need to figure out what kind of information you need to review, for your trading style. This is going to be very different between individual traders.

I'll show you an example in the next step, but think about what you need to see. Then only record that stuff.

The rest is fluff.

3. Systematize Your Journal Entries

To make things easier, every journal entry should have the same format. Here are some ideas on how to make an effective journal entry template.

Have a Timeline and a Forex Journal Template

I would suggest starting from the time you enter a trade and journal every step long the way. Even if you just write one sentence about what you did.

So this is what your journal template might look like…

• Entry
  • Reasons for entry
  • Chart with stop, entry and take profit marked
  • Additional entries for this trade idea
• Partial closes of position (if applicable)
  • Notes on partial close
  • Chart at time of partial
• Observations about trade progress
• Exit
  • Result in pips, $, %…or all of the above
  • Closing charts
• Secondary review (two days to two weeks later)
  • Thoughts about the trade
  • Chart

I have this template created in Evernote and I just duplicate the template, every time I need to journal a new trade. Here is what my template looks like:

Trade Details

This part can be a pain in the ass.

I've got a better way.

Instead of manually entering all the trade information when I open the trade, I just do a screenshot of my MyFxBook account after I close the trade.

Here's an example:

This makes it really easy to insert into Evernote. MyFxBook allows you to choose the information you want to display so you only see what you need.

If you don't use MyFxBook, you can just screenshot your brokerage statement.

On a Mac, you can hit [Command + Shift + 4] on your keyboard to get the screenshot crosshair. Then just highlight the part of the screen you want to take a picture of, and it will appear on your desktop.

Easy.

…and you just saved yourself about 5 minutes of data entry.

If you are on a Windows computer, then you can do this.

Easy to Read Screenshots

I have a system for showing trade information on a chart, that you might find helpful.

When I enter a trade, I mark off my entry, stop and take profit in Metatrader 4.

This makes it really easy to analyze a trade later.

I just use the horizontal line tool and change the color of the line. To change the settings, double click on the line and you will see two squares appear on each end. That means the line is selected.

Then right-click on the line and select Horizontal Line properties…

The next window will allow you to set the line color and the exact price that the line is at.

I use the following color coding:

• Red: Stop loss
• Blue: Entry price
• Green: Take profit
• Orange: Level I'm watching

Then I use the MT4 save function to save my chart to their server. This way, I can log into my account and get it later, especially during a busy trading day.

Entry Details

Not much to this part. Why did you get in?

For me, I only use a few entry strategies, so it is pretty straightforward. If there were any unusual circumstances, I note that too.

Again, add whatever details you think are necessary for future analysis. 

Exit Details

Same thing here, not much going on. You were either stopped out, hit the profit target, or you closed out manually.

Give a reason for the exit and your feelings about how the trade turned out.

Provide suggestions for possible improvement (if there are any) and also pat yourself on the back for things you did well.

Then provide another chart screenshot at the time of exit.

Secondary Review

This is something that a lot of traders miss…

I firmly believe in doing a secondary review of your trades. This means waiting anywhere from a couple of days to a couple of weeks, depending on your trading timeframe. 

When you review your trade later like this, the emotional energy from the trade has usually dissipated and you can see the trade from a more objective standpoint.

Take another screenshot of the chart and review your trade again. Note both the good and bad. 

You might be surprised how differently you feel about the trade later.

Find a Way to Make it Fun

Finally, it can be easy to fall behind in your trading journal because it seems boring.

So figure out how to make it fun.

Yes, it is possible. You can make anything fun or boring, just by how you choose to perceive it. 

The first thing you can do is not stress out about doing your trading journal. If you commit to doing your trading journal every Friday, but you miss one Friday because you were hanging out with friends, don't beat yourself up about it.

Just do it on the next Friday. Stressing out about sticking to a rigid schedule will only make the process more unpleasant.

Do setup a schedule, but don't be too hard on yourself when you miss one day. 

Next, find a way to make the process fun. Maybe you can imagine that it is a treasure hunt…

You are looking for the hidden secrets in your trades that will help you make more money.

Another thing you could do is to keep your trading goals in mind. Imagine the lifestyle or freedom you will have and realize that filling out your trading journal is the only way to get there.

Or you could fill out your trading journal while hanging out at a cool bar. Turn it into a fun field trip!

Find whatever makes it fun for you and do that!

Final Thoughts on a Trading Journal You Will Actually Use

Before I end this post, there is one more huge point that I want to add.

A losing trade is not necessarily a bad trade.

I see this in trading journals all the time and I used to do this too. But it is counterproductive to your progress.

When you have a losing trade, the natural human tendency seems to be to try to figure out all the things that they could have done differently to make it a winning trade. 

Trading is about winning and losing. A losing trade can be a good trade.

If you back and forward test your trading method, you will understand how often you are likely to win and lose. So judge the quality of your trade on how well you followed the system, not the results on your P/L statement.

Now go work on your journal!

What works best for you in your trading journal? We would love to hear about it in the comments below…

The post 3 Painless Steps That Ensure You Always Fill Out Your Trading Journal appeared first on Trading Heroes.

As you probably know, Forex Tester is awesome.

But just like any other software, it has its shortcomings.

One area that it does not do so well is when it comes to backtesting reporting.

In this post, I'll show you what Forex Tester 2 currently has in the way of reporting, a few of the key things that you need to be able to get out of your backtesting data, then I'll show you an easier way to get this information.

But first, let's take a look at what Forex Tester 2 currently offers, in the way of reporting…

Built-In Forex Tester 2 Reporting

Here is what Forex Tester 2 currently has in the way of reporting. As you can see, it's pretty basic. If you would like to see the text version, skip past the video.

Basically, Forex Tester 2 gives you the profit chart:

On top of that, there are these other basic metrics that they provide. I've provided some stats from a recent round of backtesting that I did.

• Days processed=5335
• Months processed=177.83
• Total trades=90
• Profit trades=64
• Loss trades=26
• Profit trades cons.=14
• Loss trades cons.=6
• Trades/day=0.02
• Trades/month=1
• Profit trades/month=0
• Loss trades/month=0
• Max profit trade=884.35
• Max loss trade=258.64
• Net profit=7384.91
• Gross profit=9953.48
• Gross loss=2568.57
• Profit/month=41.53
• Average profit=155.52
• Average loss=98.79
• Max drawdown=0.00
• Profit factor=3.88
• Return, %=73.85
• Max lot used=74.00
• Restoration factor=0.00
• Reliability factor=0.00
• Profit probability, %=71
• Loss probability, %=29

As you can see, there is quite a bit of information here. But there are also a few glaring issues.

For example, the max drawdown is zero? The restoration factor and reliability are zero? Something is fishy there.

But again, no software is perfect. 

Although most of the basic metrics are there, you should look at some other things…

What Advanced Backtesting Metrics Do I Need? 

There is some other key information that you will need to look at that might help you improve your trading method. For example:

• Day of the week analysis – Are certain days that are more profitable than others? Is there a day of the week that I should avoid?
• Monthly analysis – Are there any seasonal tendencies?
• Long / Short analysis – Are either longs or shorts much more profitable?
• Expected monthly return – Can I make a living on this when I combine my results from all currency pairs?
• And more!

But that's just for starters. Obviously, there are other metrics that you may want to look at. 

So how can you get this information when FT2 doesn't provide it?

Here's one way…

How to Use a Spreadsheet to Get Additional Backtesting Information

The first thing that you will have to do is export your trading record from FT2. Do this by right-clicking in the trades window. Click on export stats, then save the results as a text file on your desktop.

Then import your history file into your favorite spreadsheet program. Here's how to do it in the big ones:

• Import text file into Excel 
• Import text file into Google Sheets
• Import text file into Open Office
• Import text file into Numbers

Now the fun begins. The first thing that we should look at is the day of the week analysis.

So we need to find the formula that converts a date into the actual day of the week.

In Excel, the formula is: =WEEKDAY(date)

Excel will return a number for the day of the week, as follows:

• Sunday = 1
• Monday = 2
• …
• Saturday = 7

But therein lies the problem…the Date field in the Forex Tester 2 includes date and time. Some spreadsheet programs will convert this format into the day of the week, but others may not.

If not, then you will have to separate out the date from…

Oh, who the hell are we kidding?! This frickin' blows!

Let's just skip to the easy method…

How to Get Advanced Forex Tester 2 Reports for Free

This video will show you how to get started right now and they type of information that you can get from these reports. If you prefer the text version, it is provided after the video.

To get started with Tradingrex, simply create a new account. Yes, the account really is free.

They make their money by selling their reporting services to trading firms. It's free for individual traders.

Once you are logged in, click on the Add New Account button. Then give your account a name. This is not actually an account, but the name of your round of backtesting.

I recommend giving it a name like:

[system tested] [currency pair] [timeframe] [version number] [test number]

This will allow you to easily sort your tests by name. Next choose Forex Tester 2 text export as your Datasource.

Then click on the Create button to create your account.

From there, you can select the Forex Tester 2 file to upload by clicking on the Select Files button. The upload is really fast, but it may take a little longer if you have a lot of trades. Just upload one file per account for easier analysis.

Now you can check your dashboard to get stats and charts like…day of the week analysis. Wasn't that much easier than the spreadsheet method?

Another really cool feature is you can create a custom link to share your backtesting results. This is totally optional and you can revoke it at any time.

Great for team backtesting, or sharing your results with your mentor.

Final Thoughts on Tradingrex Detailed Forex Tester 2 Reports

So that's all there is to it. One thing that you should do is double check between the two reports.

Having two reporting systems can give you a good way to see if there might be computational errors in metrics that are the same between the two reports. That may involve some spreadsheet computations in the beginning, but it is better to be sure than to be making decisions off incorrect data.

Of course, since the reporting in Forex Tester 2 is very limited, you can only compare the basics. But I encourage you to test out a few different reporting methods, to see which one works best for you.

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post How to Get Free Detailed Forex Tester 2 Reports for Your Backtesting appeared first on Trading Heroes.

The Problem: You only have one trading account, but you want to track multiple trading systems individually.

Doing this can make you feel like a circus clown, juggling multiple systems at once.

Keeping track of the performance of each trading method can be a painful experience.

But it doesn't have to be.

This post will show you the easy way to automatically journal your trades, then tag each trade so you can track the performance of each individual trading system.

The Solution

Luckily, this is easy to do with MyFxBook.  Once you setup your account,

MyFxBook will automatically start to journal all the trades you take.

After you a few trades available login to your account.

When you click on the History tab, it will look something like this.

Then click on the tag icon on the left side of each trade.

This will show the tags dialog box.

Click on the Edit Tags link to create a new tag.

You can choose a different colors to represent the different methods you are trading.

After the tag is created, it will appear in the Tags Available section.

Click on an available tag to tag that trade.

Tag all of the trades with the method you used to take that trade.

After all of your trades are tagged, it is now time to see how each method is performing.

Now go to the top of the screen and click on the Custom Analysis link.

A box will appear that will give you different options on what you want to analyze.

Click on the Tag tab to choose a tag or multiple tags.

Check the boxes of the tags you want to analyze.

In this example, we are going to examine the performance of the Pivots system.

Click on the Analyze button to show the custom analysis.

Now the data that you see on the screen will only be shown for the trading systems that you chose.

This is how only the Pivots system performed during the reporting period.

Conclusion

As you can see, this method makes it super easy to track the performance of individual trading systems within a single account.

Since most of the journaling work is already done for you, all you have to do is add the right tag to each trade.

The best part is that MyFxBook is absolutely free.

The post How to Individually Track Multiple Trading Systems In The Same Account appeared first on Trading Heroes.

I've been searching high and low for a Forex trading journal that will help me review my trades, but won't take a ton of time to fill out.

After a lot of trial and error, I have found the answer in Evernote.

In this post, I'll show you how I use Evernote as a FX trading journal and give you some tips and tricks that have helped me make the process more painless.

How to Journal Your Forex Trades

Before we get started with how to journal trades, if you do not know how to export or write notes on charts, these videos will get you started.

You will need this to add charts to Evernote.

If you already know how to do this, skip to the Using Evernote section.

Exporting Your Forex Charts

This video will show you how to export charts in two different ways.

One is the standard Metatrader export method, the other is a technique that you can use for any chart that you want to capture.

Quick reference:

• Metatrader 4 – File –> Save as Picture
• Mac screenshot – Command + Control + Shift…then press 3
• PC screenshot – Print Screen (button)

Using TradingView

TradingView is amazing trading software that also makes it easy to export charts.

Editing and Making Notes on Your Chart

After you have a chart, you will want to resize it and add words, arrows and possibly funny faces to your chart.

This video will show you how to do it.

I will show you how to do it in Photoshop, since that is what I use, but I will list some options after the video.

Some are free and some are paid.

Recommended image editing software:

• Photoshop – The Lamborghini of image editing software. A great product, but you do not have to spend that much money.
• Photoshop Elements – Basic image editing that is a lot cheaper and probably good enough for most trading purposes.
• GIMP – Runs on Windows and Mac. Very similar to Photoshop, for the price of free.

Using Evernote as Trade Journal Software

Now that we have that out of the way, this quick video will show you how easy it is to get started with Evernote.

The great part is that you Evernote is free if you upload less than 60 MB per month.

It work on both PC and Mac and you can download an app to your iOS, Android or Windows device.

Of course, you don't have to use Evernote, there are many other alternatives.

You could just use Microsoft Word or even a free Blogger blog.

I use Evernote as my trading journal app because it makes it really easy to organize my notes and I can access my trading log from any internet connected device.

But what you use is up to you.

Tagging Trades in Evernote

One useful thing that you can do is tag your trades, so they are easier to study later. For example, you could tag all of your losing trades, to see if you are making a common mistake.

You could also tag all of the trades that were taken using a particular system.

Try not to make it too complex, but a basic set of tags can go a long way to helping you review your trading log faster.

See Good and Bad Trades at a Glance

Remember a losing trade is not necessarily a bad trade and a winning trade is not necessarily a good trade.

The only thing that matters is if you followed your trading plan and if you took an A+ setup.

But it can be difficult to keep track of how well you are doing.

You could use another spreadsheet, but who needs another one of those…right?!

The easiest way that I have found to do this is to use emojis in the title of the note.

I track four things:

1. Is this journal entry complete?
2. Entry rating, out of a possible 5 points. How would I rate the quality of the entry setup?
3. Exit rating, out of a possible 5 points. Did I follow the exit rules for this strategy?
4. Was this a winning or losing trade?

Here's an example from my own journal.

As you can see, this makes it really easy to see how well you are trading, just by taking a glance at your list of notes.  Feel free to use emojis that make sense to you.

To add an emoji, you can do the following:

• On Mac, press Control + Command + Space Bar to bring up the emoji menu.
• On Windows, open the touch keyboard from the icon in the lower right corner. Then click on the smiley face.
• On mobile, just use the emoji button on your keyboard.

What About MyFxBook?

MyFxBook used to be pretty good, as I mentioned here. It still works, but it doesn't always work well.

There really needs to be a dedicated journaling site, with automatic trade updates…that actually works.

FXStats (formerly Tradingrex) comes close, but the new owners are not interested in making the product better and only want to collect affiliate commissions from annoying popup ads.

It's a shame because that site as so much potential.

I'm working on a solution, but until that's ready, I recommend using Evernote with MyFxBook.

If Evernote isn't quite your thing, you can also try using Trello.

Other Things to Journal

Now that we have the basic stuff out of the way, let's get into two other things that we can journal that will make us better traders. These things cannot be journaled in MyFxBook, so that is where something like Evernote is especially helpful.

The first thing that I will be journaling is the possible setups that I occasionally see in the market. It is a good way to create notes that I can go back to later and possibly turn into new trading methods.

I can remember a few times in the past that I noticed patterns that could be a good trading system, but I forgot them because I didn't write them down.

For example, say that you are sitting at your computer one night and see that the AUDJPY seems to bounce particularly hard off of the 00 levels…more than other pairs.

You should note that down, so you can backtest it later.

You might also observe a Big Shadow on the GBPNZD 30 minute chart. Is that a good pattern to trade on that pair and timeframe?

Only one way to find out…

I will also be recording trades that I missed.

This is not to beat myself up about missing the trade, but just to get the benefit of going through the trading process and get more practice.

There is no way that I can take every single trade (and expect to get any sleep) without an EA, but I can benefit from learning from every single valid setup.

If you are serious about getting better, then this is highly recommended for keeping up with current market conditions.

Also consider capturing lower timeframe charts and charts from related markets, such as gold, oil, stocks, etc.

Trading Journal Template

Still wondering what you put into your Forex trading journal? Let me help you get started.

Here is what I put in my trading diary template: 

• Entry Notes:
• % Risk:
• Pips Risk:
• Open Chart:
• Exit Notes:
• Result:
• Close Chart:
• Secondary Review:

Yes, it doesn't have to be more complex than that.

Keep it simple and it's more likely that you will actually do it.

Get Started With Your Forex Trading Journal Right Now

Journaling your trades can seem like a tedious and boring activity, but reviewing your results is the key to success.

This is true in any endeavor.

Kelly Slater is one of the most successful professional athletes ever, and by far, the most decorated professional surfer. He has won 11 world titles, a feat that may never be topped.

In his first book, Pipe Dreams, Kelly mentions that one of the habits that he picked up early on was to review the results of his heats. This helped him figure out what he was doing wrong and what certain judges were looking for.

It works the same way in trading.

So what are you waiting for? Get started right now. Setup a MyFxBook account, sign up for Evernote. Both are free, so you have no excuses.

Do this regardless if you are trading in demo or live.

To get more tips on simplifying your trading journal, read this post.

The post How to Turn Evernote Into a Kick-Ass Forex Trading Journal appeared first on Trading Heroes.