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Nov 4, 2024
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As a trader, at some point, you'll have asked yourself, 'How can I better understand my data?'
You know that saying "The devil is in the details" ?
Well in the world of trade journaling and trading statistics...
The devil is in the data. ✅
Trading data can be invaluable when used correctly.
It can provide insight into your trading performance, help you identify trends and weaknesses in your strategy, and even give you edge when it comes to making informed decisions.
By understanding how to leverage the data that is available at your disposal, you can take your trading game to the next level.
Your data will show you where you're crushing it, and when you're rushing it.
It'll tell you where you let up, and your best setup.
It'll showcase where you're doing well beyond just P/L. 💪
Ok, we'll stop- you get the picture. 😅
So how do we get started with understanding the story our data is telling us?
Let's find out.
Collecting Trading Data Properly
This entire process of trying to understand your data must first begin with collecting a sample of trades that will easily showcase your strengths and pitfalls.
Let's compare 2 traders.
Meet Trader A.
She's a day trader. Occasionally, a few swing trades can be found in her monthly data.
She's got a handful of setups.
Some days she risks $800 on an options play, some days she risks $300 trading equities.
Sometimes she overtrades and takes 10 trades, sometimes she just takes 2.
She's still figuring out this whole trading thing.
Meet Trader B.
She's also a day trader.
She swing trades, but keeps her swing trades completely separate from her day trading activities.
She's also figuring out this whole trading thing.
She has a strict max risk amount of $500-$550.
She has 2 setups that she's worked on religiously to refine.
She sticks to a max loss amount and takes no more than 4 trades per day.
If you were assigned to analyze the data of one of these traders, who would you pick? 🤔
Trader B would be the wise decision. ✅
If you were to look at 50 trades from Trader B, it would be far more apparent to see where her mistakes, strengths, and weaknesses lie.
Her risk is defined.
She can compare the two setups.
If she loses $550 on a trade, it has hit her stop loss.
If she were to lose $800, you know that something went wrong along the way.
If Trader A lost $800, it would be tough to tell whether the trade didn't work out, or she was caught in a massive tilt moment because her size is inconsistent.
She also might be dealing with decision fatigue on days that she takes 10 trades, as opposed to how she might feel on days where she only takes 2 trades.
When you're still in the process of trying to find your way in trading, our advice would be...
💡 Focus on keeping all metrics as consistent as possible so you can learn from your data.
But, shouldn't I size up when I see a good setup?
high-probability
If I see a high-probability play, I should go in with more size right?
Yes and no.
If you're in the initial stages of trying to define your strategy and building a foundation, we suggest keeping your size consistent no matter how sexy a play might look.
For traders that have established proven profitability and consistency, your next hurdle after keeping your size relatively the same all this time would be to add a little more risk to the table on setups that you have proven to be high probability.
It's important not to rush through to this process, because taking the time initially to collect data properly will reap massive rewards in the future and save you tons of time and heartache.
If you're having trouble collecting data or you're using a trading journal that isn't quite cutting it...
Discover trading statistics and monitor your trading data with TradeZella
We're an all-in-one trading journal tool to help you become a profitable trader.
Not sure if we support your broker? We now support Stocks, Options, Futures, Forex, Crypto and more. Click here to view an updated list of the brokers we support.
