E-mini Trading And Developing A Quantitative Journal
Traders that keep track of their performance do so in a variety of ways
. In one sense, I applaud all traders who journal their trading experience. For traders who do not keep track of their trades other than through their account statements, I encourage you to consider starting a trading diary. It is my belief that the most important method for improving your trading is through quantitative analysis of your performance. It's tough to argue with numbers, and as you accumulate e-mini trades in your journal and analyze various quantitative aspects of a large number of trades you will discover distinct patterns in your trading style, both good and bad.
I encounter many e-mini traders who keep a trading journal in the narrative style. A narrative style Journal usually indicates when a trader enters and exits a trade, along with some verbiage about the nature of each trade. There is value in this style of journaling, but a more quantitative approach may yield greater insights into your strengths and weaknesses as a trader.
I personally use an e-mini trading journal based upon an Excel spreadsheet that is available commercially and have found the revelations in this style to be eye-opening.
Why?
As oppose to tracking my trades in a narrative style, I can track specific variables in my trading style and isolate those variables into trends. Some e-mini trading variables that I can track include:
Do I tend to trade more to the short side or to the long side?
Which trades are more profitable; my short trades or my long trades?
How much money do I make on my average short and long trades?
Which the day of the week is most profitable?
What percentages of my trades are with the trend and what percentage are countertrend?
How profitable are my trending trades?
How profitable are my countertrend trades?
What is my average profit/loss over a given time period for all my trades?
How far do I let mine winning trades run?
How far do I let my losing trades run? Even further, do I tend to cut mine winning trades short and let my losing trades run into my stop loss?
How long is my average successful trade? Even further, at some point in time becomes a factor in the success of my trade; what is that time variable?
These are just a few of the questions that can be answered by entering data on a well-constructed e-mini trading journal. Answers to questions such as the questions I have posed can be answered by entering data that isn't a very detailed, such as:
Entry price
Exit price
Stop loss price
Price target
Time of entry
Time of exit
What day of the week did you take the trade?
Of course, answers these questions would provide rudimentary analysis of your trading style and allow you to make adjustments to your e-mini trading that are positive. That being said, adding more information and specific equations and algorithms can produce even more useful data. While trading is not a strictly mathematical enterprise, your trading can be evaluated objectively and improvements can be made where they are specifically needed. There is no need to jump from trading system to trading system when you can employ a mathematically based analysis of your current trading and fine tune that trading to the positive side. I strongly suggest that this methodology can greatly improve your trading and when used over the course of hundreds of trades to show specific trends, both positive and negative, for an e-mini trader to focus his or her trading upon.
by: David S Adams
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