For a moment, just imagine how your trading equity graph would look like if you hadn’t taken all those trades that went against your rules, avoided the trades where you entered and exited too early or too late, or when you just jumped the gun and hopped right into the market without any clear plan. Those things usually make a HUGE difference and they are the performance killers #1.
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Edgewonk and the emotional analytics
Being aware of the importance and impacts of impulsive trading decisions and other emotionally caused problems, we included a variety of features that help you fight the most common problems of trading.
Just think about your current approach. If you are like 90% of all traders, you take a trade, close the position for a win or a loss, and then move on to the next trade. However, if you know that you have to come back to every single trade when you enter them in your trading journal, you are less likely to repeat mistakes. Being self-aware of how you trade is usually the first major ‘aha’ moment traders experience.
Thus, when you are about to enter a trade which doesn’t meet your rules or are about to make a trading mistake, knowing that you have to enter ANOTHER unnecessary mistake into your journal will help you immensely. Being honest with yourself when it comes to entering trades in your trading journal is a very important part and facing your mistakes and weak spots is part of the often painful process of becoming a profitable trader.
Setting up Edgewonk correctly
To use the emotions analytic functions of the Edgewonk journal, we have to make sure that the definitions are being entered correctly first.
If you haven’t set up the trade comments under your setting already, you should do it now to enable the emotional analytics. If you are not sure what to enter, here are some ideas and suggestions:
Entry Comments Exit Comments Trade Management
Too early Too early – no exit signal Not in trading plan
Too late – chasing Too late – want more Widened Stop
Not all criteria met Cut loser – good Moved orders too much
Revenge entry TP hit – good Pulled SL too close
Good entry Did not touch the trade
For each comment, you need to choose a rating. The rating describes the nature of the comment and the action behind the comment. For example, the entry comment “Too late” should have a negative rating, whereas the comment “TP hit – good” needs a positive rating.
This week’s challenge – Keep the Tiltmeter green
This week, your task is it to keep the Tiltmeter as green as possible. We want you to focus on making the best trading decisions possible and start building a disciplined approach. This is called the process-oriented mindset where you focus more on how well you have executed your trade and don’t stress so much about the outcome.
Whenever you are about to make a decision you know should not make and which would cause your Tiltmeter to turn red, think twice!