I have always kept a Trading Journal and I would advise you to keep one too. It is sometimes nostalgic to go back and read what you were thinking about at different points in your development as a trader. I used to keep my Trading Journal in a leather bound notebook and entries were written by hand. Nowadays I journal on computer. What I would like to share with you now is an entry I wrote almost 8 years ago on the 25 May 2009. What follows is my entry
“Yesterday evening was the first time in my life that I have ever been stopped by the police for speeding. This is of course not the first time I have ever driven beyond the speed limit but it is the first time I have ever been caught and received a hefty fine. It just made me think that all the other times I have gotten away with speeding were not worth the risk because eventually somewhere down the road you are going to get caught. It is really not worth it!
How does this apply to trading you may ask? Well let me tell you. You may be able to win the wrong way for a long time but one day it will catch up with you and you may end up losing all that you have previously gained doing the wrong thing and possibly more. So the lesson to learn is to trade/drive the correct way and you will never have to worry about being caught out! Keep to the rules ALWAYS!”
Here is a scan of this entry from my actual Trading Journal:
I am going to share with you a true story that happened to a trader who worked at one of the prop trading firms I used to work at. This trader if he was long a stock that went against him used to increase his position in the anticipation that eventually the stock would bounce back which most of the time it did and he used to make his living doing just that for many years. One day he did this and the stock never recovered. That stock was LEH – Lehman Brothers and you all know what happened to the stock. He lost over $1 Million.
Winning the wrong way reinforces in your subconscious mind that doing the wrong thing and not keeping the rules makes you money. This can have detrimental affects on your trading. Once a bad habit is formed it can be very difficult to change it. It is best to form the correct habits from the start. It is much better to lose when you break your rules rather than win!
