Trading Organization – Introduction
One of the key foundations of being successful as a trader is being organized. Alexander Alder once said this, “show me a trader with good records and I will show you a successful trader”. Improve your Trading Organization is very important such that Warren Buffet has claimed that it has been the key foundation to his success. Many would expect to just research about a company and buy it without writing anything down. In a media interview, Buffet said that before he makes an investment, he writes down the reasons for buying it. When selling, he writes on a paper, the reason for selling. This writing helps him learn from the trades. In this article, I will highlight 4 strategies one can use to improve your Trading Organization
#1 – Trading Journal/Diary
A trading journal is a very important item that will help you make better decisions. The journal has important document that helps a trader make informed decisions at the right time. Assuming that you are a technical trader who specializes on crude oil. You are also a day trader meaning that all of your trades are short term. In this case, your diary should include the technical indicators that you have tested and perfected their use. In most cases, I recommend having between 3 and 4 technical indicators. Your diary entry should therefore have all these indicators and the parameters that you will be looking at. For instance, if you are using the Relative Strength Index and it reaches your preferred number, you should place a tick below the RSI category. You should repeat this for all the indicators you are using. If the ticks are more than the Xs, then you should place a buy order. In the reason category, you should write the reason for placing the trade. This journal will help you make sound decisions in future. You can write it on a piece of paper or in a spreadsheet document.
#2 – Trader’s Spreadsheet
Apart from the trading journal, the trader’s spreadsheet is an important document that can help you make better decisions. Though this spreadsheet is similar to the trading journal, the fact is that it has some differences. The idea behind the trader’s spreadsheet is to indicate the trades that he makes. It includes a number of items which can vary from one trader to another. Some of the items included in the trader’s spreadsheet are: the trade number, entry date and time, the ticker or symbol of the asset, commission charged, fee, and the entry price among others. This spreadsheet will help you make effective trades.
#3 – Time
The best thing about the financial market is that it is a 24-hour market. It operates in many trading capitals which are interconnected in one system. Most successful traders trade specific market environments. For instance, there are some who are successful trading the Asian market which is characterized by slow market movements. Others are expert in the American market while others are excellent trading during the interception periods. As a trader, you need to have your own preferred time of trading. It could be in the morning, afternoon, or even in the evening. A friend of mine is perfect at trading in the evening before he goes to bed. He does his analysis, opens a trade, sets up the stop loss and the take profit and goes to bed. He has done that for years and he is so successful.
#4 – Reflect
The final thing you need to improve your trading organization is to reflect. This reflection should be done on a Friday evening after you have closed your final trade. I always avoid reflecting about my week’s trades during the weekend. Reflecting means looking at your journal and your spreadsheet and then analysing the wins and the losses. There will always be some losses no matter how successful you are. The reflection will help you make better decisions in future.
Trading Organization – Useful Links
- Discover new methods to improve your Trading Organization on Investopedia
- Learn how to improve your Trading Organization on Online Trading Academy