Some trading journals have fancy graphs and metrics that are supposed to show you how well you're trading.
A few give you decent information. But most are hard to figure out or have questionable value.
Our mission is to create a no-nonsense trading journal that gives you the data you need to improve your trading and present it in a clear, concise manner.
How to See Individual Trade Quality
As you know, a winning trade is not necessarily a quality trade. You may have just been lucky.
On the other hand, you may have followed your trading plan exactly, but the trade ended up losing.
So an important element of a trading journal is to have a qualitative assessment of each of your trades.
This is something that only you can provide. No fancy algorithm can figure this out for you.
You must take responsibility for your trading and review each trade to understand if you are trading well, or if there are areas where you can improve.
In RazorJournal, we provide a simple 1-4 grading scale for every trade. You use this scale to grade your trades in the following areas:
- Confidence score (at entry)
- Trade entry score (after exit)
- Trade exit score (after exit)
- Overall trade score (after exit)
We use a 1-4 scale because that's really all you need in a rating system.
- Very poor: Didn't follow any of the rules, not confident at all
- Poor: Only followed some of the rules, serious doubts
- Good: Followed most of the rules, pretty confident
- Excellent: Followed all of the rules, extremely confident
When you look at your Trades page, you will instantly see the trend of your quality scores.
Here's what the column headings mean:
- EnCS: Entry Confidence Score
- EnS: Entry Score
- ExS: Exit Score
- FS: Followup Score
We use a Followup Score on top of an entry/exit score because it allows you to come back to your trades after a couple of days and review them from a more objective state of mind.
Trading can get very emotional, and it helps to review your trades after you've had some time to cool off.
The Followup Score is green if it's 3 or 4 and red if it's 1 or 2.
So in the example above, I was supremely confident in all of the 5 trades, as showed by the 4 ratings in the EnCS column.
Of the 5 trades, 3 were executed perfectly, as shown by the across-the-board 4 ratings in the first 3 rows.
The last 2 trades had a Followup Score of 2, which means I need to improve. When I look at where the issue was, I can see that my entries were terrible on these trades, as shown with the 1 scores. But on the bright side, my exits were perfect.
So for this trading strategy I'm now aware that I should focus on identifying higher quality entry setups…and keep on doing what I'm doing with the exits.
I should also be aware that I might have a tendency to be overconfident when opening trades.
You don't need a fancy graph or convoluted metric to tell you how well you're trading.
Simply review each trade and give each component of the trade a score.
Then review the trend of your scores on the Trades screen to see how well you're trading.
A final word of caution before we end this post…
It can be easy to get down on yourself, especially after losing trades, a losing streak or trades where you lost a lot of money.
Stay as objective as possible and if you feel yourself getting too emotional, take a couple of days off before reviewing your trades.
Also review your trading rules so there is less doubt as to when you should enter, manage and exit your trades.
It's not possible to be 100% sure about all of your trading decisions.
There are many gray areas in trading.
But when you start tracking individual components of the process, you will understand your weaknesses and can work on improving them.