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Your Trading Record: Steps to Becoming a Professional Trader

Beginner traders often approach trading randomly or without a clear plan. One key to a trader's success is recording their trading activities and evaluating their wins and losses. By keeping records, traders can learn and enhance their skills. Many successful traders, including Dr. Alexander Elder, encourage all traders to record their executed trades.

Why is Keeping a Trading Record Important?

A well-maintained trading record allows traders to:

  • Analyze Performance: By recording each transaction, you can identify patterns in your wins and losses.
  • Learn from Mistakes: Evaluating your trading records helps you understand and rectify mistakes.
  • Track Progress: A trading record helps you monitor your progress toward long-term trading goals.
  • Enhance Discipline: Regular record-keeping encourages you to be more disciplined and structured in your trading. As the saying goes, "What gets measured, gets improved." A proper trading record can improve your trading skills.

What Should Be Recorded in a Trading Journal?

In his book "Come Into My Trading Room," Dr. Alexander Elder recommends recording the following information in your trading journal:

  1. Entry Date: The date you opened the position.
  2. Long or Short: Whether you went long (bought) or short (sold).
  3. Ticker (Stock Symbol or Contract Name): The symbol of the stock or the name of the contract traded.
  4. Contract Size: The size of the traded contract.
  5. Entry Price: The price at which you opened the position.
  6. Commission: The commission paid for the trade.
  7. Other Fees/Swap: Additional fees or swap charges.
  8. Total (Entry Price x Size + Commission + Other Fees): The total cost incurred when opening the position.
  9. Channel Width: The price channel width for trading (applicable to band trading).
  10. Exit Date: The date you closed the position.
  11. Exit Price: The price at which you closed the position.
  12. Commission: The commission paid when closing the position.
  13. Other Fees: Additional fees or swap charges when closing the position.
  14. Total (Exit Price x Size + Commission + Other Fees): The total cost or profit when closing the position.
  15. Profit/Loss: The calculation of profit or loss from the trade.
  16. Entry Grade: The quality of the entry based on the percentage of the day's trading range.
  17. Exit Grade: The quality of the exit based on the price and trading range at exit.
  18. Trade Grade: The overall assessment of the trade based on results and performance.

Detailed Explanation for Entry Grade, Exit Grade, and Trade Grade

  • Entry Grade: Entry Grade is calculated based on the percentage of the day's trading range. For example, if the low of the day is $10 and the high is $11, and the open price is $10.20, your Entry Grade is 20% of that range. The lower the percentage, the better the quality of your entry.
  • Exit Grade: Exit Grade is calculated similarly to Entry Grade, but based on the Exit Price and the trading range on the day you closed the position. This helps you evaluate the quality of your exit.
  • Trade Grade: Trade Grade is calculated from the difference between the entry price and the exit price, expressed as a percentage of the channel width. This helps you assess how effectively you capitalized on the price movement.

Additional Tips from Dr. Alexander Elder

Dr. Elder also advises recording the trading system/signals used and providing a brief reason for opening the trade. This will help you:

  • Assess Trading Psychology: Writing down the reasons for opening a position can help you understand your trading decisions and reduce emotional interference.
  • Evaluate the Trading System: Understanding the system and signals you use in trading helps you assess and improve your strategy.

To become a professional trader, you need to diligently and regularly keep a trading record. By noting every detail of your trades, from entry to exit, and evaluating the results and processes, you can identify areas for improvement and develop better strategies. Make your trading record a tool for learning and growth in your trading journey.

Start Keeping Your Trading Record Now!

Don't wait—start recording your trading activities today and see how you can grow into a professional trader!

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