ForexSpirit

Over the Christmas holidays I read Enhancing Trader Performance by Brett Steenbarger. This is definitely one of the better trading books I’ve read over the years. One of the key concepts of the book is that reviewing your trading performance is a vital steps in becoming a better trader.

During the years that I have been writing this blog I’ve often done daily, weekly and monthly performance reviews. It can be difficult to go back and review these types of trading critiques as they were written with full knowledge of what unfolded after trades were opened and closed. What is missing is a clear snapshot of only the information that was available when a decision to enter or exit a trade was made. The thoughts and rationales that are only ever found at the hard right hand edge of the chart are lost. Only certain pieces of the puzzle are remembered and recorded at a later date.

To get a better insight into my thought processes and trading behaviour I have started to record my trading sessions as I’m trading. I have been using Camstudio, a free video recording application, to tape my trading as it happens. It records my chart and trading platform and I use a microphone to provide a running commentary of what I am thinking. I try to spell it all out: what I’m seeing on the charts, how I’m feeling, where I see potential trade entries, am I bored, focused, distracted.

On the weekends I then try to find the time to review at least one trading session from during the week. It certainly is an enlightening experience peeking over your own shoulder as you trade. You get to take a step back and look at what you did both right and wrong.

I have been able to keep to the trading schedule that I started last year. I’m not sure if getting up before 6am is a habit yet, even after doing it for almost two months, but I’m getting there.

Up until the end of January I was trading the 6-7 EST hour, to try and see how well trading a slightly quieter time suited me. This hour was a European session only time and led into the lunchtimes of Frankfurt and London traders. It was often rangebound. It was also noticeably quite in the lead up to important news events such as NFP data or ECB rate announcements.

Since the start of this month I have switched to trading the start of the NY session. I don’t want to be trading during any of the big news announcements so I’m looking to be trading from about 8:45 til 10 EST. I want to see if I have a preference for more volatile and active markets.

It certainly helps that I am only trading in a concentrated one hour block when it comes to recording my performance. On the other hand, I don’t see any reason why a trader couldn’t record their thoughts and market actions any time they’re looking to enter or exit the market while trading a higher time frame. A video editing application such as Sony Vegas Movie Studio 9 can be used to edit together various clips so that a single video documents a single trade or a whole weeks worth of trading.

I’ve certainly found it to be of great benefit in only the short time I’ve been doing it and I don’t think I’ll be able to trade without recording my every thought and action going forward.

Another benefit is that having to speak my mind has helped me cut down on taking impulsive trades. They’re not gone completely but their frequency has been severely reduced in just a few short weeks. When you have to verbally describe setups it becomes glaringly obvious when you jump into a trade with price tearing away without you having had a plan in place beforehand. Another push in trying to get rid of impulsive trades has seen me looking to understand price action more. I’ll go into what I’m studying here in my next post.