Thursday, October 2, 2008

Update on trade measurement

Yesterday, wife took a look at my previous post and told me that some of the measurement don't make sense. (The main purpose of the measurements is to chart down the effects of FEAR and GREED manifested in the different areas of trading and work on them consciously.)

The exit. The purpose of measuring the exit was to see how many times I chicken out of a trade without a valid signal. However the way I measure it, it penalize the price hitting the SL (a good thing) more than me chickening out (a bad thing).

There's still a few bug on this so I guess this will be a constant work in progress. For now I'll change the measurement to be as follows:
  • Analysis (Right or wrong?)
  • Timing (-XXX for candles early +XXX for candles too late and +0 for exact candle, I try to get +0)
  • Risk/Reward (At least 1:2)
  • Percentage of the move I caught
  • Exit (-1 for trades that are exited (both in loss or profit) without a valid signal, +1 for trades that exited with a valid signal (SL hit, TP hit, signal change) )
I also added taking my heart rate before I start trading. I think that as I get more nervous, or scared, the heart rate will go up, which is a sign to tell me that I will not be thinking as clearly as before.

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After a week on using this system, I'm changing the exit measurement to be similiar to my timing. E+0 for perfect exit, E+1 for 1 candle too late, and E-1 for candle too early.
  • Analysis (Right or wrong?)
  • Timing (-XXX for candles early +XXX for candles too late and +0 for exact candle, I try to get +0)
  • Risk/Reward (At least 1:2)
  • Percentage of the move I caught
  • Exit (-XXX for candles early +XXX for candles too late and +0 for exact candle)

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