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Monday, 19 March 2018

I've thrown out my Trading Journal


Star Wars Chapter 1

As usual, foreplay first.

Before I started blogging, I was a reader of financial blogs just like you.

I had just been posted to Athens from Shanghai and with lots of spare time living on my own again (no longer living-in-sin), I decided to track my expenses for the fun of it!

You know, the monkey see, monkey do thing...

I got this idea from the butterfly's tavern and his famous cbox where lots of veteran bloggers of today used to mingle back then.

So for 3 years, I diligently recorded down all my living expenses. I stopped doing this "useless" exercise when I came back to Singapore.

Why?

Its evident my record shows I'm not a spendthrift. There's always a surplus every month, every year. Expenses are quite stable and predictable. No real surprises!

Only one item stood out as spikes in my spending - travelling expenses for vacations.

Am I going to stop travelling to save more money?

No.

So what's the point of recording my lifestyle costs when I knew I'm doing OK expenses wise, and I not going to make lifestyle changes whatsoever?

Yup. I've outgrown this tool. Wink.




The importance of a trading journal or investing diary






Back to square one

Investing diary, that I still keep. Must remind myself the reasons why I bought in the first place mah! The holding period is in years... Why commit to memory when I can write it down?

Also must keep track of dividends received. Like all businessmen, I want to know how long it took to recover my capital back safely in my pocket.

Yes, if you need to ask, unrealised profits don't count. If you want to count, its your business!

I like durians, you like blue cheese. Don't you tell me my durians smell!

As for my Trading Journal, I've not spent any time reflecting on my past trades for more than one year now...

Its just zombie recording as a matter of habit!?

I so silly!


1. Outcome or action more important!

Why do I still need to write down the reasons for each and every trade?

When the reasons I'm in a position were no longer valid, I'm either stopped out at a small loss or profit stopped out at a small profit.

The goal is to never let a winning position turn into a loss; and never let a paper cut turn gangrenous until I have to loose an arm or a leg!

I no longer need a trading journal to tell me I have self discipline issues. Or?


2. I measure in actual dollars; not percentages

I have no intention to add new money into my trading account (unless I blew up), nor do I have any plans to withdraw money out from my trading account in the forseeable future.

Knowing I started with $1 and I now have $11 is enough.

Simple and crystal or what?

Money is just to keep score since I'm not trading for a living anyways.


3. I not selling subscription services, workshops, or courses

So no point in keeping detailed records for my cherry picking of profitable trades as advertisement or testimomial purposes.


4. No mind - tired rest; hungry eat

For traders who like to use lots of trading indicators to help you squeeze the trigger, switching to Price Action can be so nerve wrecking!

I've been using Price Action for my entries and exits for some years now.

Its time to let go of my Trading Journal to minimise the "mental anchoring" effect. Once a trade is closed, its over.

Better to focus on the next Good Trade then to dwell on what might have been...




Don't try this at home

This post is an inside joke between me and the butterfly.

The butterfly probably shocked and surprised some in our community when he recently shared he is not going to focus on savings anymore!?

And to think a lot of the current track and measure lifestyle expenses bloggers were inspired at the butterfly's tavern, me included.

LOL!

To those who are a little confused, don't focus on "right or wrong". Its just that some of us are climbing up the mountain, some are climbing down the mountain, and some are back to square one.

At different stage of our journeys, we may require different tools.

Sometimes when we are back to square one, we may discover we don't have to climb the mountain in the first place...

But like the Buddhist parable, if we didn't climb the mountain, how would we know we needn't have climbed the mountain in the first place!?

Ding!








22 comments:

  1. If we didn't climb the mountain, not only will we not know if we can reach or like the top,we keep looking at the mountain in awe, and the mountain became bigger and bigger.

    I have so many mountains in my life. Some ino balls to climb, some I climb and got lost inside. Some I have up the climbs halfway.

    But hey, there are plenty of mountains. Who say 不到长城非好汉,

    ReplyDelete
    Replies
    1. Sillyinvestor,

      I always ask readers what's their religion or are they free thinker when they ask me about investing or trading?

      Our philosophy of life (or lack of) can have a profound impact on our world view. And that will influence our investing and trading too.


      There are mountains right off the start I can't climb as there are gatekeepers who asks for "papers" like custom officers...


      I didn't let this up mountain; down mountain analogy destroy me.

      I have the flexibility to swith to:

      The River Story


      Yup. Not everyone wants to go to Rome or 长城.

      But this only works if we can come up with our own River Story or Up Mountain; Down Mountain analogy.

      And don't benchmark yourself with the mountain climbers if we are taking the river route down...

      ;)


      Delete
  2. Once we reach unconscious competency; we may not need guides or tools anymore for our mind. Don't think this is something new or extraordinary.

    Going up mountain and coming down mountain is entirely different.

    Going upstream and going down stream same same as mountain. When Gold mines are at the up stream; no matters how hard we still have to struggle to reach there and then U turn to take easy river route down.

    ReplyDelete
    Replies
    1. CW,

      Ah! You know the technical word for it!

      Yes, its unconscious competency.

      Its part of a natural flow or process ;)


      Yet, they are those who behave like Linus from Charlie Brown - still clinging to their security blankets...


      That begs the question when we see someone coming down the mountain still clinging to the tools for climbing up the mountain?

      Is this person another Linus?

      Or maybe he has not reached unconscious competence yet?

      Coming down the mountain because he has given up?

      Or for the "wrong" reasons like retrenchments, mandatory age limit, ill health, disruptions; etc?

      Delete
  3. Congrats SMOL! You've reached the zen master level of trading! LOL!

    I guess a major advantage is being able to travel light & free and easy! No baggage! :)

    ReplyDelete
    Replies
    1. Spur,

      No, no. I still far away from master level...

      Previously, I only had 1 feet across the threshold.

      Now finally got the courage to put BOTH feet across the threshold ;)

      Still early days.

      Its like playing Diablo. Finally reach level 99 thought that's the end...

      Only to find out thats where the fun starts for dungeon raids!


      Delete
  4. Gong xi. I see you've leveled up!

    As a low-level adventurer who has barely scratched the surface of this foreign land, I need my backpack full of tools, supplies, food, maps and weapons in anticipation of the challenges I'll face.

    Wait till I've met a few more wise mentors, rescued a damsel in distress (oops, done that already), chosen a class/profession that I enjoy, died a few times (lol) and built myself a brick house capable protecting little pigs from hungry wolves, perhaps then I'll be ready to toss my backpack away :P

    Maybe then, newer adventurers would pass by my humble cottage and think of me as an insignificant NPC (non-player character!

    ReplyDelete
    Replies
    1. Kevin,

      Thank you ;)

      "Cultivation" helps my trading; trading in turn has supported my "cultivation".


      Passive indexing people like Andy and you are so modest and kind. That's despite me thrash talking passive indexing all the time!

      I bow in deference to you.


      This is something I am always humbled and grateful for.

      At this watering hole, animals of all shapes and sizes, no matter what colour or strip, are comfortable poking fun at each other - incuding themselves.

      Its like a Jazz band here.

      Imagine how boring if everyone all just want to play the piano!?

      Different strokes for different folks!


      Delete
  5. Hi SMOL,

    My take is that you should keep the journal as a record to track your life journey. Who know you will be a Grandmaster like the Legendary "獨孤求敗" in a century's time. Your skillset manual in the form of "獨孤九劍" will be a coveted asset in time to come.

    BEn

    ReplyDelete
    Replies
    1. Ben,

      Its only an excel file of my entries and exits. The interesting parts are the inserted comments but I've not referred to them for more than a year now...

      Like the discarded record of my lifestyle expenses, I've already internalised and distilled thed lessons from my Trading Journal.

      To use a Buddhist analogy, I've crossed the river using the sampan.

      I don't see the need to lift the sampan over my head on the next leg of my journey ;)


      Delete
  6. "After his third wipeout, Livermore recognized his mistake: Getting rich made him feel invincible, and feeling invincible led him to double-down with leverage on what worked in the recent past, which was catastrophic when the world changed and the market turned against him.
    He reflected:
    I sometimes think that no price is too high for a speculator to pay to learn that which will keep him from getting the swelled head. A great many smashes by brilliant men can be traced directly to the swelled head.
    “It’s an expensive disease everywhere to everybody” he said."



    Unquote:-
    And who can understanding Trading better than Livermore?

    That's why i always remind i am i not I.

    ReplyDelete
    Replies
    1. temperament,

      Yes. We know.

      A trader you definitely not!

      Although I find it interesting you trying so hard to convince yourself...

      ;)


      Delete
    2. i am not.

      i just believe anyone buy or sell anything in the stock market is a trader.

      In that sense even buy and hold & buy for 20 years of S & P 500 will most probably sell one day.

      If he sells, then he is a trader.

      Or maybe your terms in English can explain better.

      i only always interested in ideas and concepts.

      LOL.

      Delete
    3. temperament,

      LOL!

      OK, you want to be called a Trader!

      No problem. Welcome to the club :)


      For a moment, I thought you wanted to join the "parrots" who feel they are holier than thou by calling themselves "investors".

      Putting down traders as mere "speculators"...


      I think they got it wrong. That's seeing traders too "up"!

      Great speculators are god like.

      Take Li Ka-shin. He invested into China properties during the Cultural Revolution!!!???

      If that's not speculation, what is?





      Delete
  7. Replies
    1. temperament,

      That's a given ;)


      I hold great speculators like Li Ka-shin and Robert Kuok in great respect.

      I hope one day I can join their ranks - albeit as a nano speculator of course!

      Definitely not in terms of physical wealth, but with a land owner speculative mindset, philosophically speaking ;)




      Delete
  8. I used to keep tab of my trade and budgeting.
    Now i keep records of my feelings and why i did certain actions esp during crisis in work and in stock mkt. people often tends to forget their ‘初心’ after some years.

    ReplyDelete
    Replies
    1. WolfT,

      I started with focus on numbers with my Trading Journal.

      Then it dawned on me its an useless execrcise if all I want to show is - maket rise, I made money; money down, I lose money :(

      Or bull market I hit my goal (its all me); bear market I don't hit my goal (not my fault).

      How to sharpen my saw like that? (Might as well join the passive indexers)


      Fortunately, I discovered fuzzy words were needed to complement the "precision" of numbers ;)

      Started inserting the reasons why I entered and exited. And added my reviews and reflections after the trade.

      That's where lots of little lies were brought into the light ;)

      And I'm no longer afraid to admit inconvenient truths like:

      1) Kicking myself for trading badly even though I made money!?

      2) And patting myself on the head for sticking to my trading rules and trading correctly, despite losing money...

      I focus on what I can control and influence.


      Been practicing Mindfulness for some years now; hence throwing away my Trading Journal is a non-event and natural flow of process.

      I 学佛; I not 拜佛 ;)



      You are obervant ;)

      Many have lost track of their ‘初心’.

      That perhaps explain why so there are many unhappy and unfulfilled retailers seeking to escape through Investing and/or Trading?

      Or buy Toto!?


      Delete
  9. Hi SMOL,

    With regards to trading, I only recently had a journal. The rest of the time is just play play. In my journal, the important things I record are buy price, buy qty, date of buy, reason to buy. The reason to buy is usually a short sentence. If I need a lot of reasons, that's a sign that I rationalised my decision, isn't it?

    I also included a chart of the transaction. Will do the same when I close off the position, jotting down the reason to sell too. Here's the part that i find interesting. I set an alarm about a month after I sold, to remind myself to look at it again to reflect.

    I'm still finding it useful for now, because it made me less discretionary and more systematic. Maybe next time I won't do it anymore? haha

    ReplyDelete
    Replies
    1. LP,

      For entries I prefer to be discretionary; while for exits they are mostly systematic. Talk about schizophrenia! LOL!

      Looking at your blog and mine, I can see the similar process at work ;)

      I long time no write stories, and you long time no write about warrants trading...

      The topics of our blog posts have also morphed to reflect our changed status or thinking.

      Now that you're a father, your writings have taken an interesting turn ;)


      We both are definitely not writing about the SAME blog posts 5 years ago!

      Maybe that's growth?


      Delete
  10. Sorry sorry.. Recently abit busy. Long time never disturb you in this watering hole of yours. Hehehe...

    Just before I started reading the post, the title itself suggest to me that you no longer need it, which I feel that this is a good sign. It's like how one started working, pen and papers to jot down the "important stuff" to help them remember and understand.

    However, as time passes by, forget about pen and papers. The old birdies even got time to come later and leave earlier!

    ReplyDelete
    Replies
    1. sleepydevil,

      Its free and easy at this watering hole. No worries mate!

      Your starting work example is an excellent analogy to my situation :)

      Enjoy the cherry blossoms!



      Delete

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