P1:a/b P2:c/d QC:e/f T1:g
c12 JWBK182-McDowell April 25, 2008 16:15 Printer: Yet to come
Using Trade Posting Cards and Ledgers 105 Win ratio is currently 39 percent wins, which could be improved. Re-
view entry and exit strategy, look for patterns on winning trades that
could be replicated more consistently.
Drawdown can last for 7 consecutive trades, and can deplete the ac-
count by 12 percent. Adapt and strengthen trading psychology to know
that this is possible.These are just a few observations that can be helpful in evaluating this
year’s performance. There is always room for improvement, but it is also
important to acknowledge the positive. In this example, the annual return
is 50.7 percent, which is terrific for a first-year student. The greatest area
for improvement would be increasing the number of wins, and that is very
achievable with some observation and analysis.
Your results may be very different than these examples, and you will
want to creatively analyze your results to see where your strengths are and
where you have room for improvement.
Remember, any improvement is good improvement. For example, if
you are paper trading and losing $1,000 every month and you reduce that
loss to $500 a month, you have done a great job. Then it is a matter of
continuing the work to beat the market and consistently get in the black
and generate profits.
Work on all cylinders, money management, trading system, trading
psychology, and so on. When you have a balance of skills in all of these
areas your profits will increase. Usually it is the weakest link that deter-
mines the overall strength of the chain. So, it is best to work on your weak-
est link, and keep strengthening the chain links—each and every one.BEAT THE MARKET“Beat the market” seems to be a popular phrase these days; however,
your goal should be to do more than beat the market; you want to com-
pletely pummel the market and then some. And you can do so by hon-
ing and fine tuning both your money management system and your trading
system.
They both work hand in hand, and you will gain important knowledge
from your record keeping that can assist you in adjusting your entry and
exit strategies just by observing the characteristics of your winning and
losing trades. Again, replicate the winning scenarios and avoid the losing
scenarios.
Looking at my first-year trading student’s annual paper-trading ledger,
he more than beat the market. The average annual yield for the market is
around 10 percent, and he certainly beat the market with an annual yield