Hi Cadig, Sounds like you are moving from system development to implementing tactics. So now you will have trade data that, that can provide feedback to the the system, AND will be optimizable at the trade level This thread will be interesting for you to read. Scalping and Analysing your trades | Page 2 | Elite Trader About 1/2 through there is a "line-out" report (PDF) for the scalper. Look at what they are tracking and why. After that, you can learn about trade tracking software and system (https://www.trademetria.com) etc. Check those out too. Now consider which of those "metrics" are actionable, i.e. why you care. and which apply to your system. Focus on one or two items that can help the most. You can roll your own tracking using Excel. Some are harder to track auto-magically in Excel, e.g., time in trade, unless you hook it up to the broker. I did not because I can do it semi manually, if I want it, and I did not want to do too much with Excel, due to its upkeep. So much is really dependent upon the system. Which instrument, trade assumptions, risk parameters, etc. Perhaps just sit back and take a broader look at what you are doing, jot down the key pillars of the system, and drill down to the representative trade execution tactics and optimize. Never forget the goals. P/L, risk management, time optimization, robustness-resilience. I believe a lot of advanced traders do things that are pretty scrappy. Systems are not intended to be Ivory towers that shower you with money, contrary to advertising. They are more like shop stalls in an outdoor marketplace, taking care of mundane business, making money, doing whatever it takes within reason. Here are 5 things that might help get you started with the above: 1) Check your top ten best & worst trades. Remove some of them to see how your P/L changes, AS A PERCENT of P/L. It might be large. Massaging these will tell you which situations (trades) need to be optimized or limited-eliminated. 2) What is the MODE range of your trades? What are your P/L bread and butter trades. Now increase those by 15%. Maybe create a way to help replace those top ten ones above with more MODE trades. 3) Maximum excursions. Look at those. Figure out how to eliminate or enhance, or just mange better. 4) Add the element of TIME, through out the trades. Some system benefit from shorter trades and more of them, some system the opposite. Optimize your time in trade to fit your system. Apply this analysis to the two above. 5) Create a snapshot interval for evaluation. If your system does 100 trades a month, then a 25-30 trade snapshot might be a good interval to do the analysis. Enough to get data, but small enough to see optimization opportunities. Some trades matter more than others. Happy New Year and good trading to you PS: Yes, I have a lot of experience and a formal education ( in verification theory), but you can do many things with a sharp focus on a specific goal. Certainly you can do enough to get some low hanging fruit.
If you can replay older days, just pick a random day from the past and trade it "live". That is as good a practice as it gets.
Spend as much time learning as possible. You should know all of the key drivers of all of the asset classes you trade, what the market structure looks like, and the decision-making process of actors. I'm not very old (early 30s) and have traded professionally since my mid-20s. But I know the theory and pricing methods of fx, fixed income/rates, and equities. I also am very familiar with most trading strategies used at banks/hedge funds/asset managers. I know the systems I need, how to use them effectively, and have ideas to improve them. I now spend most of my time identifying/analyzing themes, training analysts to evaluate those themes and single-names in them, reviewing investment ideas, reviewing risks, and general portfolio management tasks (orders, reports, etc.).
That is right and I agree with your assessment of it. It is important to stay productive and keep learning even when a trader isn’t trading. Browsing trade forums, reading, backtesting are all essential aspects of it. I do that too when the markets are closed. I also keep researching brokers that I might end up trading with. This way I found XM and Fxview, which I’ve been using for some time. Their low transaction cost is what I found attractive which suited my trading style. But I am constantly on a lookout for new brokers and trying to work and review my trading progress in the meantime.
One of the best pieces of advice I had trouble with initially was: “Don’t make it harder than it is.” Discretionary trading is not complicated, it’s just hard to do. Many traders reach the level where they work out what to do, they just can’t do it. The “what to do” isn’t so hard, the doing of it is. All the journaling and back testing in the world won’t help if there is not patience and discipline. Give a thought to not replace trading correctly with... analysis and journaling and back testing – all of which are good in their place. Said another way: You can’t fix (or analyze away) or learn from trades taken that were not by your plan. There is nothing to learn from that kind of data or those trades. One can spend a great deal of time trying to study and learn while just going in circles. Trading is counter intuitive in that it doesn’t reward hard work in and of itself. The key is getting off on the right foot to start with. Which is a whole other topic. Keep perspective. Have a life outside of trading.
I have also heard from other traders i look up to that I should spend sometime really understanding micro structure. It also looks good on a resume to have some experience in that field. If you have some time, could you explain why its important to know about it and how a a higher frequency trader should approach learning about it vs a lower frequency trader. Also a link to a resource to get someone started would be appreciated
After market hours, you can self analyze yourself. Go for research and analysis and make strategies on how to stay in the game. Record keeping, especially journal, is also a must because you can learn from your trading mistakes and will refrain from repeating those mistakes.