#TuesdayTip - The importance of records
The human brain is very fascinating. It remembers some things in vivid detail, yet at times it distorts our memories to a large extent.
An interesting fact I came across is a research which has found that the mind remembers bad memories more than good ones. This can be traced back to our earliest stone age days where to survive the brain had to keep the bad memories more clear.
When it comes to trading, you will remember your losses very well. And this bias may drive you away from trading.
Or on the flip side, you may remember only the good trades and feel like you are an expert trader who never makes losses.
I have fallen prey to this bias. If you ask me how were my initial years of trading, I'd say horrible. I probably didn't make any money.
But if I check my trading journal, there were actually quite a few good trades!
Whichever category you fall in, to not fall prey to bias, all you have to do is one simple thing - Note down every single trade you take.
A simple excel sheet with five columns - Buy price, sell price, quantity, the strategy used and one column for special remarks(on some extraordinary event or trend you notice).
We have started a new Financial year on 1st April. Most seasoned traders on this day review the last year. Identify their mistakes, test whether their strategies are still working. They can do this because the maintain records.
Use these records to measure your performance. Your memory may be biased. Keeping a trading journal is one of the most
important factors to becoming successful.
Develop the habit of recording your trades every evening or every weekend at least. It seems like a small thing, but the benefit is huge.
We begin a new trading year this week. So go back in time, identify your mistakes, check your ideas, re-read anything you wish to and be prepared for a successful trading year!
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