Original subtitles

things in life, you can consistently improve your skill

getting better. So, this is why we focus on process-based goals

your performance but that does not mean that you are not

the market will allow you to see you directly reflect that

on how much money or maybe how much percentage you are making

and that is not how you should be measuring it. You know, most

set each month but it won't necessarily be reflected in

that as your fire because you can be constantly improving

going you have to reflect on how far you have come since

month on month but that doesn't necessarily mean that trading

we're dealing with the random environment of the market so

last month over the years and keep that as your fuel and keep

but we know that it's not really that simple and it's not

much profit as last month then it's all about the mindset of

looking at the momentum you are getting you know keep that

better but you just haven't finished this month with as

that is not how you measure your progression you have to be

fair for you to be judged on that either why because it's

especially in the short and even the medium term because

just simply not an accurate measure of your progression

know they know that you're trading and I'll ask you

the most obvious metric to measure progression by right

just because you getting better you know your mindset is

getting better you know your technical analysis is getting

dance. So try not to fall into that trap. Cos I know how it

they just don't understand it and to be fair to them it's not

their fault because profit and loss seems to be pretty much

questions like well how how much did you make this half

probabilities, they play much more of a role in when you're

is. Maybe you've got your friends and your family. You

yourself and probably to prove to others that you are making

mindset and we know that that month to month PNL then that is

behind that is that you're probably going to start taking

bring that into the management of your next trade. Now over

previous month to prove to yourself that you are

it's irrelevant. We are working with a random distribution

you've been working really hard and putting in the work for a

percent and it can be really frustrating at times because

risks in order to try and beat that previous month to prove to

you can devise a clear plan of action on how to overcome it.

you kind of you know learn something from from a previous

quite a few times but it's really kind of only when you

long-term performance. Now, I can absolutely guarantee you

to dig deeper into and figure out if your plan may actually

can you begin to put the right solutions in place. So, this is

to your plan and it will be much easier to isolate and

progression that constant growth and that constant

ever is that you want to constantly feel that growth and

seems to be a little bit too tight so now you have something

this affects a lot of traders and it used to catch me out all

mindset and the psychology of you know how do you deal with

just come off your biggest month and then there's not a

specific steps that I can take to become a better trader? You

errors that you are making potentially such as

that. Once you find the root cause of any issue, only then

only when you start to get to that monthly level of reviewing

You know, you only get better this game by one way and that

is the issue, you will see the biggest improvement in your

and this is a textbook example of recency bias so let's say

individual trade a lot of traders will take the outcome

of the time because the mindset of having your biggest month

get to the courty level when you review your previous

have to persevere in a way that is conducive to you improving

strategy and also your own human performance and adherence

they'll take that over into the next few trades that they take

just by a few pips before and then actually reverses and it

galaringly obvious part of your strategy can be improved. Then,

quarter that is where you can start to make serious

know rubbish setups when you should be cutting them out. Now

success. Obviously, the bigger the sample size of data you

early for example or things like that or they could be

trade then you instantly and and straight away you know

progression. But this is the hamster wheel of the break even

need adjusting as it seems to be something that is happening

that includes trading. If you are an ambitious person and if

how you're going to measure your improvement. You're

identify what's holding you back, you know, what

areas is causing the issue or has the biggest room for

everything after each quarter to see which one of these three

of that individual trade into their decision making process

they have tested over a larger sample size of trades. So if

draw from it. So, when you record, and review an

need a refresher on probabilities in trading. Now

understand your strategy. So this is why we perform

looking at your results on that time frame. So, here's a little

review, the more significant the conclusions that you can

only other final option is that you just simply do not yet

why in-depth journaling is really vital to your ongoing

really three things that can be happening. You're either

emotional involvement and distress on those short term

going to have a negative emotional effect when you've

basis but I only evaluate my results every quarter. So, that

potentially you may have missed way too many trades so you're

pretty you know short sighted but it will help to remove any

your performance on a courty basis and that can still be

month of data across let's say five trades would you then use

swings. Just remember if you are in it for the long run then

not seeing your true edge play out because you've missed some

going to incentivize you probably to take unnecessary

winning trade. Now, you need to be super, super, super careful

the long run. Just like the trade-by-trade reaction, our

is typically just focusing on your PNL right so it's the

if you are kind of still consistent taking those you

thought exercise that I'd like you to try for a second now to

opportunities in the market but there are a lot of average

better human intuition is to measure your improvement and

breaking your rules and you're not sticking religiously to

significant conclusion from so don't do the aim from your own

results it can be a bit tricky here's why let's say that

trades that you shouldn't because you want to beat that

progress when you are learning purely from your PNL, it is

growth by the physical results so with trading you know that

your true long-term performance. That's why hedge

profitable trades. Now, the third scenario, this is when

slightly slower maybe there are not really that many great

the big picture instead of monthly performance swings

month-to-month performance, it can really dictate a huge part

long time and then you've just had your biggest ever monthly

result happy days you are seeing your hard work and your

constantly evolving that you are actually getting better and

doesn't necessarily directly reflect in your PNL if you your

evolution then measuring your progression with trading

even aspire to be a full-time trader and you will need a

funds and investment firms, they will rarely publish

that evolution right? But if you still have that employee

going to replace the words investment funds and traders

lot of opportunities to take the next month. And the mindset

do at each level. What am I doing well? What am I doing

opportunities that can catch you out and really start to

they can be an inaccurate representation of your true

the fast-paced nature of the trading style. Now, naturally,

performance per month, it can give the wrong impression of

the fact that you are constantly improving but yet it

annual cycles and they are fixated on the long-term

this is where you can make the biggest improvements in your

market moves suggests that the most reliable measurement is at

financial obligations and also the salaried employee mindset

bring your results down you know over a long period of time

you have a growth you are seeking that constant

one way is self analysis. Reviewing everything that you

data so over three months to draw conclusions from. Now,

considerations if your trade plan is adjusting and tweaking

psychological blockages you may have or potentially what

side they can be sometimes hard to differentiate from the

badly? What are my major weaknesses? What are the

monthly form of income to live off we are programmed to

it's just a trade that falls into the second category where

which trades you really need to dig into you know to look for

business mindset which thinks in and reports in quarterly and

because now you have a a much more significant sample size of

when you perform your annual review at the end of the year,

significant monthly gains and therefore allows for the

why would you get emotionally involved with short term

often say oh I made ten R this month or I had a five hour

at the weekly level when you review the entire previous week

and figure out where you went wrong because this is just

sample size of data to draw anything near a statistically

even five-year performance because their approach to the

be explicitly honest with yourself here because when you

wasn't actually valid you just got lucky and luck is not how

with business and employee because you may be or maybe

for this are quite our trading style it allows us to make

know what potentially maybe affecting your results and

cycles and it really gives you that short-term horizon but you

the long run that's just going to be a recipe for

which you know, market conditions and simple

moves back in your favor then you know that you just stop

per period of time that does give us a better understanding

following your plan to the T and also looking to see if you

long-term growth and returns and in most of those types of

trades these fourth type of trades they are usually a

and higher then can you begin to look for any patterns that

you are simply looking to see if you made any mistakes by not

know, build a new sort of plan around that and go and test

your tried and tested and proven trade plan or

disaster. Because remember the outcome on an individual trade

need to develop a traders mindset which is essentially a

have a section in your journal that states whether a trade is

on that in terms of how the strategy performs no of course

our and loss and our drawdown. Now these metrics are often

adapt your rules to the to fit that last trade and then you

the pace of their activities and the pace at which the

monthly results because their focus is quarterly, six-month,

obviously focused on short-term gains but long-term compound

non-executing trades or maybe you keep cutting trades too

drawdown last month. They're all pretty you know common

executing and analyzing with consistency. So, as long as you

of our emotional state. Individual monthly results,

qualitative analysis when we journal and when we review

followed your plan perfectly but let's say let's say that

monthly or you know, even sometimes a weekly basis due to

you know maybe you managed it wrong or or anything like that

growth. So, a day trader wishes to know how they perform on a

we didn't you know perfectly perform all of the rules within

performance is just simply not relevant if you're in it for

long-term performance. Now, I measure my results on a monthly

incorporates both the quantitative and the

improvement. Now, if you can isolate which of these elements

that data to make any sort of judgement or base any decision

patterns in the actual strategy that actually may you have

missed any trades that actually are a part of your plan because

negative return for a quarter then generally there are only

in the world of investing, the focus is generally always on

process which we'll take a look at in the next lesson I would

market is long term and they do not engage in day trading. So,

underneath called setups and what you can do is you you can

we look at the steps of the journaling process in depth in

that you review a trade and you see that if you hadn't managed

next trade instead of sticking to their management rules that

expressed against a period of time. You know people will

model. So you know watch the trading and edge module if you

the majority of us here in Photon, we will be monitoring

least a minimum of a one-year time frame. Now, on the other

don't work. So these in my opinion are kind of the only

that new plan to actually see if it holds up over a large

it slightly differently you could have made an extra fiveR

funds, they will only focus on the year-on-year or you know,

but then what a lot of traders do is then they go into their

means that my focus is on the quarterly results and you're

those really clear rules in your trade plan and these

next trade and they try to manage it that way right in the

execution so when you analyze a trade you will usually see that

the topic of how to measure your progression now there are

that employee mindset, it just forces you to think in monthly

the next lesson I just want to end this lesson by discussing

it was a lot but it you know it actually was valid and then you

actually valid so this is where you know you you need to have

don't need to worry about over analyzing it to potentially try

countless ways to measure the performance of a trader and the

results. It's just irrational. Now if you do happen to get a

implement some you know practical solutions to try and

estimate future performance. However the time frames over

sample size of trades but for the most part you know you must

conscious of what an ideal setup actually looks like and

reasons potentially why you took that loss there or maybe

individual monthly results. Zoom out and even measuring

it doesn't meet all of the criteria of your trade plan or

trades that you should really try to learn from on the losing

fourth type of trade are those which are not valid and they

our trading performance on a monthly basis. Now, the reasons

progression naturally paying off but then the next month is

well it performs and you only tested the strategy on just one

which performance is measured and expressed varies greatly. A

horizons. So, measuring and expressing your trade

you wouldn't because it's nowhere near a big enough

and annual results. The reason for this is that monthly

your plan okay so they are the four types of trades that every

time. You know, almost nothing in the real world is linear and

most sort of obvious metrics to judge our performance by our

after every single trading session. So, you're just

as a trader, not just simply doing the same thing all the

make it as seamless as possible because remember this entire

phrases right? And there's absolutely nothing inherently

wrong with that. You know expressing performance metrics

actually valid or not and this will really help you to see you

translate income to monthly payments because of our

that rapid growth now I've built you a trade journal you

monthly measurement of performance now I'm just

you remain consistently profitable in trading now the

side of the spectrum, there is, you know, the day trader who's

result of a fundamental problem in your analysis or your

trades is that any trade will generally always fall into one

be constantly looking at and just burning them into your

trade you take will fit under but just make sure that you

you notice that you got stopped out of a lot more trades maybe

realize that you know if you took a winning trade but it

this particular setup playout a lot, you know that at the

of how past performance came to existence and it helps to

trade you know how you entered it where you place your stop

major difference can be seen in how investors measure their

may be forming so these patterns could be psychological

happen to get lucky. Now, of course, if you start to notice

second type of trade where it was a losing trade but it was

now have developed a new edge, so of course then you can, you

performance and how traders measure their performance. Now,

people find this really really hard to do but it's how you get

moment, it doesn't currently meet your rules, then you may

where the probabilities of your edge are playing out now before

your trade plan rules so these are the trades that you want to

know for your trading dashboards on notion that

of these because most of the time, you know, these are

qualitative side of your journaling you know so you have

time right we understand the process side of our business is

usually trades that are not within your plan but you just

can to do that, you'll be one step closer to your next run of

like play right now we'll go through those processes in the

because of the proper ballistic nature of trading. So, these

winning trades that are obviously you know valid with

then just noting any of the key lessons that you took away from

be in your trade plan section right on your notion dashboard

winners that should be part of your probability model or the

you take a trade that does not meet all of the minimum

future. Really you can only do that if you do the work and you

criteria of your plan but it happens to work out and it's a

minimum criteria on your plan but it just didn't work out

think about let's say you are testing a strategy to see how

you can write all of these emotions out what you're

put tons of examples in there of your high probability

where the refinement comes in. So in order to fully understand

losing trade. So, this is a trade that meets all of your

consider when you are journaling and reviewing your

it is also a winning trade these are great trades now once

are the losses that you want to celebrate because you are

help you prevent kind of you know your self sabotage in the

to perform your journaling process but something to

a trade your trading routine but very importantly it's about

are looking for ways that you could improve the trade or

start tracking that you know now as you're trading and as

that as much as possible by trying to make that work feel

next lesson and I'll show you exactly how to use it and how

constantly looking at them. Now, the second scenario is

where you take a valid trade but it just happens to be a

also save a copy of that trade review in another folder it may

if you have a look on there there will be a folder

you're going along. So the qualitative side you know it

of these four scenarios now the first scenario is a trade that

extremely important but we need to try and kind of adhere to

you want to be looking at these you know before, during, and

you know, again, that's okay because you can actually take

you have journal these trades you know following your usual

that all in one solution in one place just to kind of try and

is a valid trade it meets all of your trading plan rules and

your emotions getting involved and then you can start to

explicitly honest with yourself which in reality you know most

feeling maybe if you felt the urge to cut the trade early or

really give you an amazing insight into actually how your

know why you did that and the emotions that you felt and then

so when you're in when you're in the trade you know you can

keeping yourself honest. You have to be ruthlessly and

definitely takes a bit more work because it's all about

different elements of your trade so of course both the

when you look back over your trades you know this will

between your performance and the actual strategy performance

self review. And this is really you know it's about looking at

identifying where potentially you have made some mistakes and

maybe it's just you that's actually under performing the

that specific trade once you've reviewed it now what you can

loss how you managed it right everything that's involved in

performance because once you do that that's when you can then

the trade and during the trade when you are managing it right

also do is you can track your emotions when you are executing

will follow. So you need to be measuring your own personal

actual strategy because maybe you've made mistakes executing

surely be to stop executing that strategy altogether right

the actual execution and management of the trade but you

go back in and objectively see what is happening you know from

maybe if you did cut the trade early you know write in you

emotions may be affecting your edge and your overall

you'll store the screenshots of all of your trades after you

have executed them or you know you can take screenshots just

is what we the qualitative analysis which essentially is

higher time frame analysis the meeting time frame and then

the strategy perform really well but if that's the case,

the story behind the numbers that the you know the

spreadsheet spits out to you you need to actually look at

identify what is going on behind those numbers. So this

that is where you figure out how to improve and that is

sure that you are executing correctly and then the results

know to dig deep into your trades and you're looking for

performance discrepancy against the actual strategy

performance. And by looking at that gap at that difference

then afterwards you will write down and you will describe the

some confidence from that because you've now figured out

work but you just need to make a few little tweaks to make

your trades and really you know deep dive into that and try and

your lower time frame execution the reasons why you took the

a certain point if it continues to show poor numbers in the

any common patterns that keep occurring again and again so

before you're executing them as well if you wish to do so but

your trades, you don't really know the full picture because

just where you're taking more of a descriptive approach you

the issue that you know, actually your strategy does

winners that week or that month that actually would have made

it or maybe you've just missed a lot of setups that were

or you know at least pause it until you figure out you know

already but a lot of people do not take their journaling any

how you can improve first but unless you actually look at

trade journal let's say that it's telling you that one of

journal the the obvious and the logical thing to do would

are also some automated softwares that can do this for

you too now this is a great start if you're doing this

further than this step and the problem with that is when you

right so generally you would download your trading account

statement from your broker and you would record all of your

just those those sort of key numerical metrics like that

rarely paints the full picture of what is actually going on

essentially being the accountant for your trading

Microsoft Excel or Google Sheets for example and there

trading data in a spreadsheet application you know like

your setups is performing really poorly right well after

kind of get all of numbers you know spat out the data it very

with your trading because imagine that your spreadsheet

average winner your profit expectancy and you know there's

of your results because as the famous saying business goes

ultimately a zero-sum game. You should constantly confront your

know, over the rest of your competition in what is

there's a quantitative side and then the qualitative side so

the quantitative process of journaling your trades is just

what gets measured gets managed the most valuable information

your PNL your strike rate the size of your average loss

business so you are crunching the numbers you're checking

really there are two main aspects to journaling so

the process of recording and reviewing your trades and

about your trading is your trading so again journaling is

performance head on and that starts with the post analysis

automatically giving yourself a massive edge over them, you

Digging through your journal is the work that other traders,

not just stagnating or worse, you know, even going backwards.

they're just not doing. So, if you do do it, you are

your losses you know particularly early on in your

generally where the easiest and the biggest gaps for

that they have taken is because they want to disassociate

constant evolution and progression and this process

leaps forward. As professional traders, we are seeking

improvement are where you can kind of make those big quantum

themselves to avoid the pain of their losses. But reviewing

will help to make sure that we are on that path and that we're

journey that is where the growth lies. And that's

chanting every weekend because the sad reality is, is that

their own trading. People don't want know the stats. They just

deep psychological reason that most people won't collect

cold hard facts. They don't analyse and review the trades

based on faith and to not actually be confronted with

there are very few traders who actually know the truth about

performance metrics. Because people want to believe just

want to gamble and they just want to win big. But there is a

pretty much the first sign of a punter who's just aimlessly

Now, journaling is pretty simply just a process of

not digging your head into the sand because I've given up

recording and reviewing your trades. Now, make sure you're

track their edge meticulously. Not journaling your trades is

being shocked at how many traders I chat with that do not

and not outcome-based goals, especially in the short term.