Not Just Hindsight: Journaling and Following Trades As They Unfold
Many of my posts are bascially taken from my trading journal (which I keep entirely on a Hipster PDA). They include trades where I have capital at risk as well as paper trades. I like to post the setups and trades as they evolve vs. looking backwards later and doing the “woulda, coulda, shoulda” boogie. It’s much more useful in identifying opportunities for improvement in my methodology (if I have anything that could be called such).
If we operate only through the rose-colored glasses of memory, the hindsight dance is as useful with stock trading as it is with past relationships, that is, largely worthless. We need to know what we were thinking when we made the bad decision, and what information we were basing that decision on, in order to avoid repeating our errors.
It’s easy enough to look back at a situation, or a trade, and say “it was a huge mistake” or “it was a great call.” But what does that tell us about what to do in the current situation, or how to avoid getting into the same spot in the future? Not a damned thing, unless you consider “Don’t make mistakes” to be useful advice to give a human. We need more specific information… exactly where we should have turned left last time when instead we turned right.
What I (and many others) have found most useful, in both my trading and my personal life, is to keep a record of situations as they unfold, i.e. a journal. It enables us to look back later at what I was thinking “in the moment” and discern at what point and in which specific decisions and judgements was my thinking… stinking.
Then, when we find ourselves in the same situation in the future (and we all do, don’t we?), we will have the chance to make a different decision at the appropriate crossroad. Whether we actually make a different decision, well, that’s more about personal growth, our true primary journey on the old Third Stone from the Sun.