Monday, June 11, 2012

Are you a trader or a gambler?

How can you be 100% sure that what you are doing in the financial markets is trading rather than gambling? Well, surprisingly, the answer to this critical issue lies in a much simpler question:

Do you keep a track record of all your trades?
Keeping good records is a key factor to your success in trading. In fact, record keeping defines if you are heading toward success or failure in trading.
Why is that?
By keeping good records a trader will learn from his mistakes and hopefully he will not repeat them in the future. By doing so a trader can develop a trading strategy from his own trading experience. Records will also help a trader to reach a high level of self-discipline which is crucial in trading. Keeping a track record will contribute to your awareness helping you know yourself better as a trader.
So, what’s a track record and what it should include?
A track record is an excel sheet with all your trades. To make it easier every sheet will represent one month of trading, each line will represent a single trade and every column will represent a different data of the trade. The basic version must include: Trade number, strategy or reason for entering, time basis or chart (weekly, daily, hourly etc.), Entry date, Deal type (Long or Short), Symbol, Size, Entry price, Stop loss, Take Profit, Exit date, Exit price, Profit or Loss and Conclusions. A trader may include additional information that he consider as important and valuable.

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