Why should we keep a Track Record?

One of the best practices a trader can adopt is to document all their trades, enabling them to analyze past performance and draw conclusions for the future. Let’s explore why having a track record is essential for success.

Most investors only look at their PnL (Profits and Losses) without paying attention to the trades made, whether positive or negative. Very few have the routine of documenting their trades for an ex-post analysis.

It’s challenging to improve performance without evaluating past actions, minimizing the element of luck, and seeking a comprehensive understanding of performance in executing trading ideas as well as personal psychology.

Among the various benefits of keeping a track record, we can mention:

– Details of current positions

– Analysis of winning trades

– Identifying mistakes

– Win rate

Having detailed records of open positions allows us to analyze assumed risk and balance the portfolio accordingly. It also helps in inventory control and managing stop losses.

When closing positions, analyzing what was done, why, and how the chart continued is a good practice for winning trades. This helps reinforce successful strategies and find areas for future improvement.

The track record of losing trades is perhaps the greatest asset, as it allows us to see where we went wrong, why, and what we could have done differently both at the start of the trade and during its course. Based on this, we can draw conclusions to avoid repeating the same mistakes.

The Win rate not only indicates the accuracy of our trades but also informs the level of risk we should take. We may have more losing trades than winning ones, but by cutting losses quickly and letting profits run, our overall results can be positive.

These are just some of the benefits of noting down what we do, why, and for what purpose. 

Some only record entries and exits, others include the investment thesis, and a few add comments during trade management

Each style is unique, and it’s up to each trader to find which version of a track record fits their way of working, but one thing is certain, without a track record, we are blind!

The important thing is to seek continuous improvement by knowing our mistakes and trying not to repeat them. However, one cannot improve something that is not measured or understood!