Reflection – A Road Less Travelled

Being able to know where one’s self is in terms of their journey and goals is as important as taking the actual steps to get there.

Being able to know where one’s self is in terms of their journey and goals is as important as taking the actual steps to get there. Whether you have reached your goals or not, you need to reflect to stay humble, improve and grow as a person and trader. So why is reflection unlikely to be included within many trading plans?

I believe that there are a number of reasons why people don’t take the time to reflect on their trading. The first is the reflection process itself might not seem important enough to warrant time on. Secondly I believe that people don’t know how to reflect in such a way that allows them to grow. This is why I have dedicated this post on helping traders to reflect in a positive way.

First let’s understand the definition of reflection.

“Reflection”   The act of reflecting, as in casting back a light or heat, mirroring, or giving back or showing an image; the state of being reflected in this way.  (Source Dictionary.com)

So we need to first have something to look at before we can receive something back. This means the first step of reflection (in trading) is keeping records. So what is worth keeping as a record then? I record the following information on each trade: trading instrument, time frame, date, type of strategy, the rules the trade met, the risk plan for the trade, the reason for the stop loss, a target point and a full trade life from start to finish. This information is captured in the form of a text box in PowerPoint like you see below.

I include this information on the trade with a screen shot of the setup before it has triggered or, as it was triggered, so I am able to come back and see exactly what I was looking at at the point of raising the order.

Following this capture of information I then include all time frames that are relevant to the trade in multiple screen shots to give me a bigger picture view.

The final step is when the trade has an outcome. Capturing the outcome screen shot is very important because it is the first step in the reflection process. It is impossible to follow the process I have mentioned thus far and not have a feeling of reflection when the trade is over. This is perfect because you can add comments on how you feel the trade went. You can include questions about anything you like at this point, these are questions for yourself at the end of the week. It can also be a place to congratulate yourself on a job well done.

If you have captured screen shots and notes on all your trades for the week, you have now got the information you need to reflect. The time I usually look at my trades is on a Sunday afternoon because it is the longest period of time from the market closing I can get. It allows me to have a couple of days off and takes me out of the trading brain and usually into a more relaxed state. This relaxed state allows me to assess each trade and write a follow up comment. Then I create a weekly trading report that collects all the information and puts it all into one place. I record my profit or loss for the week, the number of trades, winner’s v losers and anything else I see fit to include. I end the week having learned from the past week and give myself a fresh starting point for the week ahead.

It has helped me immensely over the years. Make it a part of your trading routine and see if it helps you.