Planning is more important than luck
In the investment field, many investors tend to only focus on their profits and losses (PnL) and ignore the detailed analysis of specific transactions. Whether it is a successful transaction or a failed transaction, most people will not record their transactions in detail, which makes it difficult to analyze and improve afterwards.
It is very challenging to improve performance, reduce the luck factor, and seek a comprehensive understanding of performance when executing trading ideas and personal psychology without evaluating past behavior. In order to overcome these challenges, it is necessary to record trading behavior in detail.
Keeping a detailed record of current positions helps to analyze the assumed risks and adjust the portfolio in time according to market changes. At the same time, it also helps with inventory control and stop loss management.
Analyzing the decision-making process of a trade and the chart movements when closing a trade is an important step in winning trades. This helps to reinforce successful strategies and find areas for future improvement.
Recording trading losses can be the greatest asset because it allows us to see where we went wrong and what strategies we could have taken differently both at the beginning and during the trading process. Based on this analysis, we can draw conclusions to avoid repeating the same mistakes.
Win rate not only indicates the accuracy of your trades, but also the level of risk you should be taking. Although you may have more losing trades than winning ones, by cutting losses quickly and letting profits run, the overall results can still be positive.
How to record transactions
The way each trader records may differ. Some only record entry and exit points of their trades, some record investment theses, and still others add comments during trade management. Whichever method you choose, the key is to find the recording method that best suits the way you work.
It is very important to seek continuous improvement by learning about our mistakes and trying to avoid repeating them.
However, one cannot improve what is not measured or understood! Detailed trading records are not only a tool for traders to reflect on themselves, but also an important basis for continuously optimizing trading strategies.
Suppose an investor buys a stock at a certain point in time and sells it when the price rises to the expected target, taking profits.
By recording every detail of the transaction - including the time of buying and selling, price, market conditions and psychological state at the time - investors can analyze the factors that led to success.
For example, he might discover that certain market signals suggest a buying opportunity, or that certain news events drive stock prices higher.
This detailed record and analysis helps investors make decisions more confidently and accurately when encountering similar market conditions in the future.
In another example, an investor bought a stock at the wrong time, resulting in a loss. By keeping a detailed record of the transaction, the investor can reflect on the root cause of the mistake.
It may be due to misjudgment of market trends or due to emotional decision making.
By reflecting on failed trades, investors can develop strategies to prevent similar mistakes. For example, setting tighter stop-loss points or conducting more comprehensive market analysis before making decisions.
Whether it is winning trades or losing trades, detailed records and analysis are the key to improving investment performance. By recording the details of current positions, analyzing the success factors of winning trades, identifying errors and improving strategies, investors can continuously optimize their trading methods, reduce the influence of luck factors, and pursue more stable and sustainable returns.
For any serious investor, keeping detailed trading records is not only a good habit, but also a necessary means to achieve long-term success. Through continuous learning and improvement, we can go further and more steadily on the road of investment.
Good luck and see you next time!
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