A trader\'s money management system

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c11 JWBK182-McDowell April 25, 2008 16:14 Printer: Yet to come

Tracking Profit and Loss Results and More Formulas for Success 93

Another issue to clarify is that analysis isnotjust determining if you

were profitable or not profitable, end of story. It goes deeper than that

and requires a little bit of math to evaluate some vital statistics that you

should know every day. We’ll get into the specifics of these vitals in just

a minute.

MAKE THE COMMITMENT

Have you mentally and physically made the commitment to focus your re-

sources on tracking profit and loss and vital statistics? If the answer is no,

then we need to find out why there is resistance to this concept.

Here are a few questions:

Q1.Is it too much work?

Q2.Does it seem overwhelming?

Q3.Have you tracked results before and it didn’t seem to help?

Q4.Are younotinclined to be analytical in nature, are you not motivated

by the details, are you more motivated by the big picture, the big idea,

and the big breakthrough?

Q5.Psychologically, is it uncomfortable to see that you arelosing—is it

more comfortable to postpone the news, maybe in the hope that it will

correct itself?

Q6.Psychologically, is it uncomfortable to see that you arewinning—is it

more comfortable to not know for sure? Is there pressure to continue

winning—are you only as good as your last winning streak?

Q7.Do you feel that record keeping is not the answer to greater

profits—that the answer is in focusing your resources to find a bet-

ter trading system?

These questions can uncover important clues in determining how you

will move forward in your record keeping approach. Consider the following

answers and comments to the previous questions:

A1.If you feel that record keeping is too much work, do you consider

yourself a lazy person? If you are traditionally lazy, then trading may

not be the right fit for you, since it will require a certain amount of

effort in order to be successful. If you are traditionallynotlazy, then

you have to ask yourself why it feels like too much work.