You’re not the only trader who falls into bad habits from time to time. Sure, we all will occasionally blow a stop when we get a little overconfident, but I’m not even referring to those kinds of habits….. I’m talking about the ones outside the actual process of trading.
Irresponsible trading is in many ways a byproduct of choices we make outside of market hours. One very common way to trade irresponsibly is by failing to do your homework . However, even worse is when you are not keeping close enough tabs on your trading account.
It’s real easy to view account statements and print out daily P&L sheets when trading is going well, isn’t it? After all, every one of us likes to see the progress we’re making – whether it’s reducing our waistline or fattening up our trading accounts!
So here’s a simple tip that will help your trading: Print your daily P&L sheets!
My broker has an “Intraday View” which I print from the Portfolio Manager, and it breaks down all kinds of stats on the day’s trades. Included are such things as Total P&L, Commissions, Longs vs. shorts, and Biggest Gain & Biggest Loss. Just taking a look at basic stats like these takes about 30 seconds of my day. When the closing bell rings, I hit the print button and it’s right in front of me. But the benefits run deeper than just the superficial numbers.
One of the most important parts of the sheet I print out is the stats on my account. At a glance, I can see my account’s Starting Net Worth on the day, Net Worth Change today, and the current Net Worth on the account, along with the day’s P&L numbers. Having a hard copy of these stats in my hand each day makes the numbers seem a little bit more real, believe it or not. Punching holes in it and filing it into a binder is just part of my post-market routine, and it helps me keep close tabs on my progress.
It’s easy for me to flip back in the binder and see where I was in the past, whether a week or a month ago. But what I really like is that by forcing myself to review my progress in this way regularly, it helps me adjust my trading throughout the year. I can easily see where I stand in relation to my goals. I can also see if I need to be trading larger, smaller, or even less-frequently based on how my results have been. If things are going well, I need to bump up the size. If my account is shrinking, I need to back down the size and get more selective. And if the results are somewhat stagnant, then it helps me to see that a trip back to the drawing board and a closer review of my recent trading methods may be in order.
Be a responsible trader and keep close tabs on your trading account! I’m willing to bet that forcing yourself to even glance at your daily results will help you make critical adjustments to your trading as the year progresses.
President, The Stock Bandit, Inc.
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]