When speaking with a client recently I was reminded that many of the mundane, listless, yet important tasks that are essential to the trading success of me and my clients may not be common knowledge to all. One of these tasks is the detailed record keeping of trades, a now automatic chore that continually allows me the opportunity to analyze and learn from my trading successes and failures.
I first picked up the habit of keeping a detailed trade log after reading Toni Turner's "Short-Term Trading in the New Stock Market". I remember reading this book at the height of my swing trading career, eager to know everything there was to know about technical analysis. And though our technical markets have changed so dramatically since the first publication of this book there are still quite a few lessons to be learned from it; one, of course, being the importance of keeping detailed trade records. This kind of record keeping may not be entirely necessary for longer term, fundamental investors, but for short term, technical traders, it is a non-negotiable.
When developing my trade log, or trade sheet, I include the following information:
- Entry date
- Equity symbol
- Number of shares purchased
- Entry price
- Total purchase price, including commission
- Initial stop loss (generally, in my case, a support level or technical indicator event)
- Profit target
- Exit date
- Amount of days held
- Exit price
- Total sale price, including commission
- Profit/Loss (total sale $ - total purchase $)
- Profit/Loss % ({total sale $ - total purchase $} - 1)
Depending on the style of the trade, other fields that could be beneficial may include:
- Risk to reward ratio
- Second or adjusted stop loss
- Second or adjusted profit target
- Any others as you see fit
Here is an example of what the beginnings of
