Math is boring. Besides, it is hard and who needs it anyway? But for traders, math is an important building block. Mathematical principles are always surrounding you during your trading day – even if you don’t know it. Fortunately, the mathematical problems a trader has to solve are not very complex and they can be boiled down to a handful of concepts and principles.

The following math cheat sheet is designed to help you during your trading day. It covers the most commonly and most important math aspects for traders and should be your daily companion because it takes out the guesswork and helps you make more sophisticated decisions. You do not have to waste time crunching numbers in your head anymore and can focus on what is happening on your charts. Just click on the image below and it will open up automatically.

Download Edgewonk’s Math Cheat Sheet

As traders, and most of us still with a full-time job, time is a precious resource. Even though we know that analysis and preparation is the most important thing when trying to become successful, most people do not want to do it simply because it costs time.  “How can I enter a trade faster into Edgewonk?” is thus our topic today. We have compiled the 5 biggest time-savers that will help you enter a trade in less than 2 minutes. Do you think spending  2 minutes per trade is worth it if you in return discover your trading edge, improve your trading performance and become a more complete trader overall? Decide for yourself.

1. Organize your workspace

This sets the foundation. If you have 2 screens, it is very easy. Use one screen for Edgewonk and display your account statement and your broker terminal on the other one.

If you only have one screen available, we suggest you minimize the ribbon in the journal so that you can get more space for Edgewonk and then put Edgewonk and your broker account statement next to each other or on top of each other.

2. Entering a date within seconds

You shouldn’t spend too much time entering the date and we noticed that some of our users write out the full date – there is a big time saver for you.

Instead of writing “2015-Sep-09”, you can just type in “9-28” and then Edgewonk converts it automatically to the correct date.

Another Excel shortcut is: CTRL + ; (semi-kolon) which inserts today’s date into the selected cell.

3. Using Excel’s pre-selection

Excel is pretty smart and it remembers your previous data entry. For example, if you have entered the setup “Breakout” before, the next time you want to enter a trade with the Breakout setup, it is enough to just type in a “B” and Excel will pre-select “Breakout” for you and you can confirm it.

4. Use the Tab-key to jump forward and to confirm your selection

After Excel has pre-selected an entry (previous tip), you can use the Tab-key on your keyboard and apply the pre-selected item. Excel then automatically hops to the next column and you can go on with your data entry.

5. Price: Copy/Paste from your broker statement

click to enlarge

Copy and pasting is possible in Edgewonk. So, you can just go to your broker statement and copy the values you want to transfer into Edgewonk. In Edgewonk, select the cell, right-click and select the choose the pasting method from the image below. You can paste multiple entries, as long as they all belong into one column.

Using these 5 tips will help you reduce the time you need for entering new trades into your Edgewonk trading journal and start discovering your edge even sooner.

Where do you start and how can you get the most out of your Edgewonk trading journal? As you probably have noticed, Edgewonk is a pretty sophisticated tool with lots of functions and features. For someone who opens Edgewonk for the first time, it takes a bit of time to get used to it. The good news is that the learning curve is pretty steep and you will become familiar with all the different components very quickly – often within a day or two.

But for you to get the most out of your Edgewonk experience, we developed a cheat sheet that helps you get started much faster. It shows you which areas to consult based on your own interests and what you want to improve. The following graphic explains the three step process:

right-click and choose ‘save target as’ to save the image to your computer

Step 1 : Pick the area(s) you want to improve on

What it is that you want to improve in your trading? Without knowing what you want to get better at, tracking data becomes a pointless task. But, if you have a clear goal, Edgewonk will get you there super-fast.

Pick as many areas as you like; we suggest narrowing it down to one or two at a time because it allows you to really focus on those areas and see improvements faster. The 4 big pillars that Edgewonk can help you with are developing discipline and building a better mindset, finding ways to optimize your trade management approach, analyzing your order placement, your stop loss and take profit strategy, or improving your risk management and position sizing.

Step 2:  Streamline your data-entry process

The Journal area of the Edgewonk trading journal is quite extensive, but you probably do not need all the things at once. Depending on the areas you identified in step one, there are specific fields you need to fill out to unlock the analytic features – you are able to leave out others.

By optimizing your data entry process and only entering what you really need, you can significantly reduce the time it takes to enter your trades and find your edge much faster.

Tip: The only absolutely mandatory fields include: the Entry Date, Instrument, Setup, Buy/Sell, Entry Price, we highly recommend entering the Stop Loss and Take Profit prices, Exit Price, Outcome and the  Gain/Loss ($). Then, identify the additional fields based on your goals.

Step 3: Consult the right Edgewonk analytics

After entering a large enough number of trades, you can then start analyzing your data. Based on the area(s) you picked during step one, Edgewonk provides individual and very specific analytic functions.

We also provide detailed and step by step guides for each of the analytic sheets to make sure you understand what Edgewonk is telling you. Therefore, take a look at our manual site where we put together a list of all features and explanations.

What’s next?

After working on one area, you can then move on to the next things you want to work on. To do this, go back to step one, pick your new chosen field and continue with the other steps.

As you can see, using Edgewonk does not require magic tricks and if you know which buttons to push, your journaling experience will be effortless and very enjoyable, just as it should be.

Further reading:

5 Excel hacks for a faster Edgewonk experience

What to do when you open Edgewonk for the first time?

Our manual site includes links to the most important articles and helpers

Emotions are without a doubt one of the biggest influencing factors in your daily trading. Emotions and emotionally influenced trading are responsible for revenge-trading, chasing losses, missing good trades, letting losses get out of hand and many more trading decisions that cost traders money. If you want to know more take a look at our emotions cheat sheet.

Just think about your performance, how would your trading account look like if you hadn’t taken all those trades that were against your rules? (Hint, if you have no idea, maybe it’s time to join Edgewonk and find out how much your emotions are really costing you)

In order for you to avoid the most common emotionally caused trading mistakes, there are 4 things that can instantly help you to step up your game and minimize the impacts emotions have:

1. Separate charting from execution

This tip alone can, and will, make a big impact on your trading game. To avoid kneejerk reactions, close your trading platform after you have entered your trade; don’t just minimize it, but close it for good. Then open another platform for charting where you observe your trades without having the possibility to move around orders, add to the trade or close it prematurely. Of course, you could just open your trading platform and mess around with your trade, but this approach adds a barrier and makes you aware of your trading decisions.

You don’t need to open another brokerage account. Free charting sites like Tradingview.com are ideal as a charting platform.

2. Walk away from your desk

To make this point work, make sure you have your stop loss and take profit orders in place so that not much can happen when you walk away. Often, when we sit in front of our screens too long, we get too attached to the trades we take. Watching every tick of your trades usually always leads to decisions that should have been avoided.

Walking away from your desk and doing something completely different for only a few minutes is a technique used by many performance coaches. It takes your mind off the subject and when you come back, you have a completely different perspective.

3. Man up and control yourself

To develop discipline, you just have to do the thing you want. You want to know more about business, then you have to study and start your own business; you want to get in shape, you have to start exercising and eat better; you want to become a more disciplined trader, then you have to exercise discipline.

For the next month, make a commitment to not touch your trades after opening them. And regardless of what you think would be the best thing to do with your trade, you don’t do it. You just sit back and let price do what it is going to do. For that month, write down exactly what you would have done, why and how it would have impacted your performance.

You will see that in 99% of the time, what you think would have been the best thing to do in a certain situation, usually always leads to bad trading.

4. Take your eyes off the charts and journal

The last tip is also a very effective one because it takes your mind immediately off your trades and greatly helps you refocus.

After you have entered your trade, open your Edgewonk trading journal and enter your trading data into your journal. This will not only help you use your trading time more effectively, but it will also help you get a different view on your trades.

Entering the trades into your journal reminds you of what your trade goal and thought process was. When you then get back to your charts, you are more certain and aware of what your trade plan is and you are more likely to follow through.

Now the ball is in your court

Although you will never be able to eliminate emotions completely from your trading, you can significantly change how they impact your trading. By following the described tips, you can instantly reduce the influencing power of emotions.

If you have any other tips that you use in your trading, please leave a comment and we will add them to this article.

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Image source: https://unsplash.com

Let us ask you a question: Do you still remember your last 10 trades? No?! How about your last 5 trades? Still nothing?! Do you at least remember all the trades you took this week?

When talking to other traders, we are often surprised about how sloppy and hasty most people approach their trading. Imagine you are a football coach and you don’t remember your last 5 games, or a business man who doesn’t know the sales and growth numbers of the last month.

It does not matter in which business you are, if you have no way of keeping track of your past performance, making improvements is impossible.

Why are you keeping track of trades?

It’s only worth putting in the time and effort of tracking trades
if the insights and tips you get provide actionable tips. – Edgewonk

Before we get into the “how”, let’s talk about the “why” first. Ask yourself why you are keeping track of your past trades, and what are your objectives and goals. Even if a trader decides to start journaling his trades, he often does it for the wrong reasons. Journaling for the sake of journaling and because you can read everywhere that keeping a trading journal is a must, is not going to help you become a better trader.

You need a clear goal in mind and then structure your journaling routine around those goals. Do you want to work on your mindset and develop more discipline? Do you want to find out what is costing you the most money and how to overcome those mistakes? Do you want to analyze your stop and profit placement and improve the way you set your orders? Do you want to optimize your trade management or your position sizing and risk management?

All those questions lead to very different journaling approaches and each trader usually has individual and very different goals when it comes to working on his trading game. Thus, the first step is to be aware of what you want to improve.

Further reading:  Streamlining your trade entry process to save time and improve very specific areas

3 ways of keeping track of your trades

We are now showing you the 3 only ways that are available when it comes to keeping track of your trades and why choosing the wrong approach usually leads to frustration and no improvements.

1) Remembering your trades

This is probably the most commonly followed “approach”, but if we come back to our initial question “Do you remember your last 10 trades and how much do you remember about them?”, it becomes obvious very fast that not keeping a physical journal is the surest way to losing money in trading.

A trader who has no way of keeping track of his trades is assured to stay behind because improving and making money then becomes the result of pure luck.

2) The paper-stack journal

Once a new trader decides to journal his trades, he will usually start scribbling down notes on paper. This “paper-stack” journal is a major improvement compared to not tracking your trades at all, but it still is far from perfect.

As we have seen by asking “what is the goal of keeping a journal?”, loose notes will rarely provide an answer to your very specific problems. A paper journal does not allow you to have a professional and detailed review process. It can’t tell you whether you are setting your stop loss too far away and potentially could increase your R-multiple. It can’t analyze which trade management mistake is costing you the most money. It won’t tell you whether your take profit orders can be placed farther away to increase the size of your winners. It won’t tell you whether your position sizing is the factor that is keeping you from profitable trading. And so on.

Although writing something down is better than not keeping track of your trading at all, it usually does not justify the time and effort you put into it.

3)  A trading journal with performance analytics

You are right, we are referring to our Edgewonk trading journal here. We have built Edgewonk with years of trading experience and with the feedback from hundreds of customers and other traders. And we only have only one goal in mind: helping traders make specific and measurable improvements.

Every function and field in Edgewonk is there for a purpose, and regardless of your current level of expertise or your goals, you will find different features and functions that will help you get better. After answering the question “what do you want to improve and why are you journaling your trades?”, Edgewonk shows you exactly which data is needed to provide actionable tips about what to change:

Further reading: How to make measurable improvements fast

Edgewonk does not make you track more data than what is actually needed to make the improvements you want to achieve. And the implemented algorithms analyze your trading data in the most efficient way. Keeping a trading journal then is not a tedious chore, but a routine you engage in because you know it will transform your trading.

Additional tip: Before you start your trading day, take a brief look at your journal and review your past 5 – 10 trades. Take notice of what they have in common and try if you can see some repeated mistakes that you need to be aware of. This should not take longer than 5 minutes, but a quick reminder before you start your trading day often works miracles.

We get dozens of emails each day and we noticed that some questions come up over and over again. That’s why we compiled the 5 most frequently asked questions in this article. And if you have any other questions around Edgewonk, don’t hesitate to contact us; we are more than happy to help you with anything that comes across your mind.

1. How can I use Edgewonk in the cloud?

You can use Dropbox, Google One Drive or any other cloud based service to access your Edgewonk trading journal from different computers. After saving your Edgewonk trading journal for the first time, you will notice that Edgewonk creates two new files (see the screenshot below).  Place these two files in your cloud and install the Edgewonk application (the file with the robot – the Wonk – head) on the computer you want to access your trading journal from. And that’s it.

PS: If you install Edgewonk on a second computer, you have to open and close your journal once. Afterwards, you can then choose to open your saved data from your cloud.

2. Can I use Office365 with Edgewonk?

Edgewonk requires you to have Excel 2010 or newer. But the good news is that Microsoft is now offering Office365 which is a subscription based version and it also works with Edgewonk. There are two versions; the first one costs $ 6.99 per month and it gives you access to all the Office programs. The second version is where it gets really interesting; it comes at $9.99 per month but you can share it with 4 other people, which brings the cost down to $2 per month, and you also get 1Terra Byte OneDrive cloud storage per user.

You always get the latest updates for all Office products and many of our Edgewonk users have taken advantage of this deal already.

3. What is the difference between the RRR (Reward:Risk Ratio) Realized and R-multiple?

The RRR Realized and the R-multiple are similar statistics but interpreting the numbers is very different.

The R-multiple is probably what most traders are used to and it’s more of a performance measurement; an R-multiple of +2 says that your trade was a winner and that you made twice the amount of the initial risk; an R-multiple of -0.5 says that you had a losing trade, but you cut your loss in half. [read more about R-multiple here]

The RRR Realized is a proprietary measurement that analyzes the overall trade distance and it cannot turn negative, which sometimes causes confusion. For example, a losing trade where your “Planned RRR” was 1 and you exited at your stop loss still has a RRR Realized of 1 (whereas the R-multiple will be -1).

The RRR Realized allows you to immediately compare it to your initial (planned) RRR and to analyze your trading behavior.

If you believe that the RRR Realized does not offer any helpful information to your trading, don’t let it distract you and instead focus on the R-multiple. Edgewonk offers a variety of different measures so that each user can choose what he feels most comfortable with.

4. Do I have to track all my trade data?

Edgewonk comes with a lot of different features, but the truth is, not every person needs all the functions all the time. You might start out only using the emotional and psychological functions to work on your mental game and as you progress, shift towards the Updraw and Drawdown statistics to work on your order placement. Further down the line, you might decide to start tracking alternative strategies to find a better stop loss method and then start making use of the grading and the Custom Statistics to separate your trades and to create a better risk management strategy.

The point is, although Edgewonk offers so many different functions, you should take it step by step and work on one area of your trading at a time. Here is another article that discusses this topic:

Only track what you really need to make improvements fast!

5. Help, where is my save button?

In the newest Edgewonk version, we improved the stability and functionality of the saving process to allow for cloud storage, among other aspects.

If you see a greyed out Excel save symbol, it doesn’t mean that you can’t save Edgewonk or that you have to close Edgewonk and wait for Excel to ask you to save; this doesn’t work always and you might lose some data.

Simply click on “File” and you can see the save option.

Tip: You can create as many save files as you wish to track different accounts or use Edgewonk in any other way.

Everyone is always trying to make better trades, riding winners longer, cutting losers earlier and increasing their overall winrate. But, how do you get there and what is needed to make sustainable and meaningful changes?

Most traders change their approach on a trade-to-trade basis, without ever backing their changes up by hard numbers. Edgewonk can help you take out the guesswork; the internal algorithms crunch your trading data in new ways and find weaknesses in your trading and identify areas where you can make adjustments that lead to significant improvements.

The “Updraw” and the “Drawdown” are two of the most popular metrics among our Edgewonk users because they provide valuable insights into your trading that can help you realize bigger winners, avoid giving back profits and increase your overall winrate. The following article shows you how to use the Updraw and Drawdown to tweak your trading.

Bigger winning trades with the help of your Drawdown

The Drawdown measures the lowest price of your trades and it tells you how much price moves against you during the duration of your trades.

In Edgewonk, you can filter your trading performance by the outcome of your trades. You should filter for winning trades and pay close attention to your Drawdown value. If it is significantly less than 100%, you are setting your stop loss too far away.

Reducing the distance of your stop placement, potentially increases your reward:risk ratio and, thus, the size of your winning trades. Once you understand the connection between Drawdown, winning trades and the reward:risk ratio, it becomes really as simple as that.

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A higher winrate and better performance with the Updraw

The Updraw measures the highest price of your trades and how much price moves in your favor. In your Edgewonk journal, filter for losing trades and analyze the Updraw values.

An Updraw of close to, but less than 100%, indicates that price almost makes it to your take profit order; but then price turns ahead of your profit target.

A trader who finds that the Updraw of his losing trades is just slightly below 100%, can potentially increase his winrate and turn losing trades into winning trades by setting his profit target a bit closer. He then avoids giving back profits and can close his trades for profits.

click to enlarge

3 clicks in Edgewonk to analyze your trading data

Everything in Edgewonk is built and designed to help our users find their edge faster. If you want to analyze your Updraw and Drawdown, go to the Performance Tables, select the outcome filter in the top left and your performance data updates immediately. On the right, you then find the statistics for your Updraw and Drawdown.

You can go one step further and take a closer look at your data by applying the other Edgewonk filters to your performance metrics. You can analyze your performance individually for specific reward:risk ratio sizes, position sizes, based on the quality of your trades, or with the help of any of the personalized Custom Statistics.

click to enlarge

Taking out the guesswork to build confidence in your skills

Most traders “follow their instincts” which typically means that they make random changes to their trading strategy without knowing if it’s really what they should be doing.

Edgewonk’s performance analysis takes out the guesswork and provides actionable tips about how to adjust your trading. By knowing that your changes are backed up and confirmed by sophisticated trade and price analysis, you can more confident in your trading, make better trading decisions and improve your trading step by step with the help of personalized performance feedback.

Interested? Try the Edgewonk trading journal for free and see how it can help your trading. If you don’t want to go this path alone, take a look at our 12-week journaling and trader development program.

Trading without a stop loss is probably among the most discussed topics among amateur traders. But often they don’t fully understand the implications of trading without a stop loss and how not having a stop loss influences their trading and the growth potential of their trading.

The following 4 points highlight the problems that will occur if you are trading without a stop loss.

1. You can’t control your position size

If you do not place a stop loss and don’t know where you want to get out, you cannot calculate your position size. Although you may vary the amount of contracts you buy, it is impossible to know what you are actually risking if you do not define a stop loss.

The Edgewonk trading journal does not ask you for the amount of contracts for an individual trade because calculating position size is much more accurate if you know your stop loss price. This point by itself shows why it’s so important to set your stops.

As a trader you are in the business of managing risk and without a stop loss, you can’t measure your risk.

2. No reward:risk ratio

The reward:risk ratio is a very underrated and misunderstood figure in trading. Trades with a small reward:risk ratio should be avoided if your winrate is not large enough. Without a stop loss, there is no way of determining the reward:risk ratio of a trade and and, thus, there is no way of knowing whether the trade you are about to enter will provide a positive expectancy.

Edgewonk comes with a number of reward:risk metrics because we understand the importance this figure has for traders. By knowing the reward:risk ratio you can take out the guesswork and only take those trades that have a positive expected outcome. Without a stop, you are missing out on all the benefits of this metric.

3. You cannot measure trade management

Analyzing how your stop loss changed during the duration of your trade provides insights about your trading, you cannot get any other way.

By comparing the initial stop loss position and the final outcome of your trade, Edgewonk can analyze exactly how well you are managing your trades. Often Edgewonk will find weaknesses in your trade management, point out ways in which you are giving away money or leaving money on the table. A trader who does not have a stop loss is doomed to trade without knowing how to improve his trade management.

4. Knowing which stop placement doesn’t work

When it comes to stop placement (or exiting trades) a trader can choose from a wide variety of options; placing a stop above/below highs and lows, using a moving average, trailing a stop loss or using a fixed stop are just a few examples. And even if you are not using a stop, you have to determine how you exit your trades.

The trader who uses a hard stop has a major advantage; he can very accurately analyze the performance of his stop loss approach and then make adjustments based on his findings. If your stop placement is all over the place and you have no consistency in exiting trades, making improvements is impossible.

The Edgewonk metrics are designed to provide actionable insights about how your stop placement is really working for you and how to adjust your strategy to potentially increase your performance. Again, a trader who does not use stops, will miss out and making improvements will be almost impossible.

Protecting your capital should be your #1 priority

Almost everyone gets into trading because they want to make a lot of money. No one thinks about the risks. Then they go broke. Especially for beginners, their job is to protect their capital as effectively as possible in order to stay long enough in the game to eventually become a break even trader, and ultimately a profitable trader. Reasonable stops and risk levels will keep you in the business for a long time to come and help you improve your trading on so many levels. Don’t neglect them.

*The points made in this article are tailored to spot trading, mainly for forex, futures, stocks, spread betting and CFD trading. Other asset classes such as options trading are based on different premises.

Volatility and time of day impact your trading (performance) all the time, even if you are currently not aware of it. By the end of this article you will know exactly how time of day and volatility influence the prices you see on your charts and how to tweak your trading strategy so that you can avoid the most common problems.

Why do you have to be aware of volatility?

It is important to keep track of volatility for mainly three reasons. First, your stop placement has to adapt to changing volatility; during low volatility times, you can (and should) use a smaller stop loss and increase the amount of contracts you have to buy without necessarily increasing the risk. On the other hand, when volatility is high, you should use wider stops to avoid getting whipsawed.

Second, volatility impacts the way you should set your profits. In times of high volatility you can use a wider profit and capture wider market swings and when volatility is low you should use a smaller profit target so that price does not turn ahead of your target.

Third, entering a trade during inactive (low volatility) periods can often be a gamble because price could break out to either side any minute.

Volatility in the forex market

The time zone you live in and your daily schedule have a big impact on the currency pairs that are best suited for your trading – especially if you are a day-trader. Forex pairs are typically most active in the specific trading sessions of their own country. For example, the EUR/USD is most active during the opening times of the European (Frankfurt and London) and American (New York) stock market; the EUR/JPY is most active during the European and Asian trading session; and the USD/CAD is most volatile during the New York session.

The 3 screenshots below show different currency pairs and the shaded areas highlight the trading sessions of the particular pair. The ATR indicator at the bottom confirms that the peak volatility is almost always in the particular session of the pairs.

If you are a day-trader, this repetitive behavior highlights the importance of choosing currency pairs based on your personal schedule so that you can avoid having to sit through low volatility times. For example, if you live in the US and work a regular job, trading Asian and/or Australian currency pairs could provide better opportunities because these trading sessions fall into your evenings.

USD/CAD – The US session is the most active period | click to enlarge

EUR/USD – The European and US sessions are the most active periods | click to enlarge

EUR/JPY- The European and Japanese sessions are the most active periods | click to enlarge

Volatility in the stock market

The stock market is different from the Forex market and since there is no 24-hour trading, volatility impacts price movements in different ways. The screenshot below shows the DAX (German stock index) and the vertical lines mark the open of each trading day. The ATR at the bottom follows certain and very obvious rhythms and you can typically find two ATR peaks per day; the first peak occurs after the morning open of the Frankfurt stock market and the other one in the afternoon, usually after the lunch break.

Many professionals, thus, focus on mainly trading the open and the early afternoon. Pre-noon and pre-close trading times are often much thinner and lack momentum.

The vertical lines mark the market of the day. The ATR peaks after the often and during mid-day trading | click to enlarge

Setting up Edgewonk to analyze volatility and time of day

The examples of repetitive volatility cycles in Forex and stock trading highlight the importance of being aware of the market environment you are in and adapting your trading style to generate a stable trading performance.

In Edgewonk, there are 3 ways in which you can track, analyze and tweak your trading based on volatility and time of day:

1 – Setting up a Custom Statistic

First, you have to set up a new Custom Statistic. If you are a Forex trader, it makes sense to tag your trades based on the different Forex trading sessions. As a stock trader, you could create tags for “market open”, “pre-noon”, “post-noon” and “pre-market close”. Also, tracking VIX or ATR standings can help your performance analysis later on significantly.

Knowing the market environment your trades were taken in is invaluable and it will open up new insights later on. The screenshot below shows four examples of how a trader could set up his/her Custom Statistics.

2 – Improve and adapt with your order placement

Once you start tagging your trades based on time of day, you should then consult your Edgewonk Updraw and Drawdown statistics. These figures analyze your stop and take profit placement and show you how to stop giving back profits, how to increase the size of your winners and how to increase your winrate overall.

Analyzing your stop and order placement based on the time of day and during which session(s) your trades were taken will help you create a personalized and very individual stop and profit strategy.

Further reading: How to use the Updraw and Drawdown statistics step by step

PS: If you are looking for further help, take a look at our 12-week program where we walk you through the Edgewonk trading journal and show you how to tweak your trading system step by step.

3 – Does volatility scare you?

With Edgewonk’s trade management analytics you can see if you are making more mistakes during high volatility times. Some traders feel the urge to constantly move around their stop and profit orders during the duration of their trades. This often results in bigger than necessary losses and winners that could have been bigger. With the Edgewonk trade management analytics you can see exactly when you are making mistakes and if you should stay away from high volatility or if you can handle it well.

Further reading: How to use Edgewonk’s management analytics

Financial markets follow patterns. Edgewonk helps you take advantage of it

The screenshots show that financial markets follow a certain rythm and the volatility patterns are very obvious. Thus, tracking volatility and time of day is a must for traders who are looking for ways to improve their trading. By understanding how volatility impacts your performance, you can take more of those trades that work and avoid the market conditions that don’t work for you.

Image credit:

Charts have been obtained using tradingview.com

The myths of high time-frames

There are many myths in retail trading but the one that trading higher time-frames is easier is probably among the most talked about. Is it really true? Does trading higher time-frames allow you to “look through the noise” and see the “real” price action, as the advocates of higher time-frames suggest?! In the following we discuss 3 reasons why trading high time-frames can actually be harder and lead to bad trading.

Why it’s not true #1: Patience and trade entries

The most obvious reason why trading high time-frames is often more difficult is because of the patience that is required from the trader. By default, most amateur traders struggle with patience and entering trades too early, not waiting for all entry criteria to be present or being bored and randomly entering trades is already one of the main reasons why so many traders fail.

Moving to higher time-frames where entry signals are even less frequent will rarely do any good. If you get 3 trades per day on the 1H time-frame, you might only get 1 trade every 2 weeks on the Daily time-frame. Imagine having to wait 2 weeks for a single trade and patiently sitting on your hands. You might say “well, then I just add more markets to my watchlist” to counter this effect – we will discuss the impacts of such an approach under point #3.

If you are already struggling with patience in your trading, moving to higher time-frames will usually not go well with your personality.

Why it’s not true #2: A longer holding time and in-trade decisions

Let’s say you have waited patiently for a few weeks to get your trade entry. Now you are presented with a completely new set of problems. Trading the Daily time-frame means that you have to hold trades for days and often weeks. Amateur traders struggle a lot when it comes to trade management and in-trade decisions. Having to sit through retracements that can last for several days can become a real challenge then. Or, holding a winning trade for days and weeks and patiently keeping your trigger-finger off the mouse and not closing the trade prematurely can be really hard.

If you have problems with letting your winning trades run and easily get nervous when price moves against you, trading high time-frames will compound this effect.

Why it’s not true #3: You can’t just watch more markets

One argument of the advocates of higher time-frames is that you can just watch more markets to counter the effect of a longer waiting time. Unfortunately, it is usually not that easy. Different markets behave very differently and your trading methodology has to be adjusted for each market.

Volatility, how markets respond to price action, general price and momentum dynamics can vary significantly between different markets. A trader who tries to apply his trading methodology like a template across different markets often sees very mixed results.

The choice of time-frames is very personal. How Edgewonk can help

One size fits all does not apply to trading and the choice of your time-frame. You have to be self-aware and audit your strengths and weaknesses. While some traders might do better on higher time-frames, other traders will outperform on the lower time-frames.

With Edgewonk, we usually advise our users to set up one Custom Statistic to track the different time-frames; for every trade you take, assign the time-frame which you choose to make the trade entry. With the help of the Edgewonk analytics you can then find out exactly which time-frames work best for you and where you struggle the most. Edgewonk helps you take out the guesswork and shows you what is really working for you!

We offer a free trial for the Edgewonk trading journal. Test it for free and see how it can help your trading:

Edgewonk free trial

5 things to look for in your Edgewonk journal before you start your day.

What does your general trading routine look like? After talking to hundreds of traders we noticed that the vast majority just fires up their trading platform and then starts hunting for signals and trades. Did you know that your past trading results, even if you are not consciously aware of them, still impact your trading decisions – even days later? Starting your trading day like a professional to avoid common problems can easily be done by anybody. The following 5 points should serve as your pre-trading checklist to help you get in the pro trader mindset.

Before you start your trading, go back to your Edgewonk trading journal and revisit your last 10/15 trades and pay close attention to the following 5 points:

1. The outcome. Over-confidence, ego problems and being afraid.

Are you from a series of losers or winners? A recent losing streak often causes confidence issues or it can lead to excessive risk taking to make up for losses faster. A recent winning streak, on the other hand, can lead to sloppy trading and too much confidence.

It is essential to know where you currently are with your trading so that you can avoid pitfalls and emotionally caused trading mistakes.

2. Trading mistakes and mindset. Not all wins are good and not all losses are bad.

Not all winning trades are good and not all losers are bad; it is important to understand how you make your trading decisions. Therefore, take a look at your Tiltmeter; is your current Tiltmeter showing a red or a green bar? And is it rising or declining? A red and rising Tiltmeter signals undisciplined trading and it warns you to keep calm.

3. Trade management I – PCP / PCR

The reward:risk traffic lights analyze the expectancy of your trades. A green light signals that your trades were large enough and provided a positive expectancy. Well done! A red light indicates that the reward:risk was too small and that you should avoid such trades or aim for a larger reward:risk ratio if possible.

4. Trade management II – R-multiple

The R-multiple column in the Edgewonk trading journal section provides information about your trade management. Especially if you see R-multiple numbers of less than -1, it should set your alarm bells ringing because it means that you widened your stop loss and lost more money than originally planned.

You can also check your Trade Management tab in Edgewonk and see if the potential and actual performance converge or diverge. A potential performance that is significantly higher than the actual performance signals problems in your trade management. [click to read more]

5. Over trading?

Finally, check and see how many trades you have taken this week already. Over-trading (taking too many trades) is a main reason for losses that could have been avoided. If you see that you have taken unusually many trades while your Tiltmeter is red and rising, you might be better off taking a break to regroup.

Keep it simple

We urge you to keep the pre-trading checklist simple. It is important to have a routine that you can easily and efficiently repeat every day.

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There are 5 stages every trader will go through over the years. You can’t skip one and knowing which one you are in and being totally honest with yourself is essential.

Unconscious incompetence

This is the initial phase of a newbie trader when he is just getting his feet wet in the markets and looks at his trading platform for the first time. At that stage, a trader doesn’t know how much he doesn’t know, which can often be a liberating, but dangerous place to be in.

His trading decisions are pretty much still a gamble and not backed by a sophisticated decision-making process; although the unconscious incompetent trader will never admit that – he doesn’t know any better yet.

A few characteristics of the unconscious incompetent trader:

• He randomly opens and exits trades without a defined trading system
• He changes his “approach” on a trade to trade basis
• He does not apply risk management or position sizing principles
• He often changes his trade direction on the spot and chases price
• He gets motivated by winning trades and does not care much about losses
• Beginners luck is what keeps him going
• One loss often wipes out all previous wins

At this stage, the traders with beginners luck are more likely to keep going and make it to the next stage. Often, however, traders lose money, get easily discouraged and acknowledge that trading isn’t as easy as clicking a mouse.

Conscious incompetence

Now it dawns on the trader how little he knows and he starts to understand that he has to put in the work and study more. Motivated by a few lucky winners, he studies everything he can get his hands on.

A trader who still loses money consistently, even after spending a lot of time learning about trading, will often start blaming his tools, the wrong indicators, missing information or unfair markets; he is looking for external excuses.

This stage of conscious incompetence is the one that lasts the longest. Some traders will never leave this stage, even after years of being involved in the markets. A few principles and questions can make you aware of potential problems in your trading mindset and general approach:

• Have I changed my trading system more than once in the last 6 months without really putting in the work?
• Am I actively reviewing my trades to find out what is going wrong?
• Am I still making impulsive trading mistakes that cost a lot of money?
• Do I repeat the same trading mistakes over and over again?

Sit down and try to answer these questions. Be honest with yourself even if the truth hurts. Lying to yourself will keep you trapped in your current state and you won’t be able to improve and evolve as a trader.

The Aha moment

It sounds cliché but this is the time when the trader accepts responsibility for his actions. He understands that all his past mistakes and false behavior will not get him anywhere. If a trader is really serious about making this work, there is typically only one way and the following principles describe the “new” mindset:

• He stops changing systems and focuses on making the one he has work
• He starts monitoring his behavior to find negative behavioral patterns
• He follows a daily trading routine, starts keeping a trading plan and a trading journal
• He understands that entries are just one part of his system and that, in order to become profitable, he has to work on all components of his system

Conscious competence

The trader now starts to realize what trading is all about. Although trading is still not easy and his results are far from being perfect, he understands the importance of process-oriented thinking. He stops focusing on only the outcome of his trades.

Traders at this stage are typically break-even traders and slowly start to turn their equity graph up. Discipline, emotions and adequate risk management are of utmost importance at this stage and a long-term approach will keep the trader from falling back into old habits.

The trading journal becomes his most important companion at this stage because it provides an objective look at his performance and behavior.

Unconscious competence

This is when trading becomes boring – and trading should be boring! At this stage, the trader has spent years of looking at screens and taking the same setups hundreds or even thousands of times. He knows exactly how his preferred setup looks like and trading becomes a waiting game.

At this stage, the trader has fully internalized that he can’t win every trade and, more importantly, he does not really care about losses as long as he has followed his rules. Trading is now an activity of pattern recognition, risk management and constant self-improvement.

The unconscious competent trader has a thirst for self-improvement and constantly studies the markets. He evaluates the effectiveness of his method. His trading journal is now the most solid foundation of his money making business. He can turn to it whenever the markets throw a curveball at him.

Which stage are you at right now?

Being a trader is a life-long journey of self-improvement and self-discovery. The markets teach you something about yourself every day. In fact, a trading plan that makes money for a trader is simply the extension of his own personality with all its qualities and imperfections.

Your task right now – if you are not a consistently profitable trader yet – is to sit down and take a deep look at yourself. Then try to answer the following question: which stage are you at right now?

Try to answer this question as best and honest as you can. The moment you answer this question, and draw the consequences from it, you will be on your path to improving your trading bit by bit until one day you will finally reach controlled profitability.

You are stuck with your trading!? Take a look at our 12 week program where we help you discover what is holding you back and keeping you from moving to the next stage.

We won’t sugarcoat it because from own experiences and from our work with hundreds of traders we know that trading is very hard and challenging. No wonder that the analysis of brokerage data confirmed that 40% of traders quit after 1 month and only 7% are still active after 5 years.¹

But why is it so hard and what makes traders struggle so much? We have talked to loads of traders throughout our program and there is a common theme among all of them to be seen. The reason why so many traders give up too early and don’t see the results they are looking for, can be boiled down to 9 principles. The following points will help you understand what it takes to survive your first year(s) as a trader and also how to pave the way for a great trading future.

Expectations

The first question traders always ask is “how long does it take to become profitable?” and this is a very wrong question to ask – when starting out. Yes, it is possible to become a profitable trader within a few years but it is much more likely that you will lose (several) trading accounts before that. Thus, you should ask yourself “how can I not lose all my money?”

Although it does not sound good and it might be a downer for some of you, it is important to realize that you won’t make a lot any money in your first year as a trader. If you can trade around break-even and not lose any money, you are already better than 99% of all traders and are off to a great start.

When starting out, you have to focus on not losing all your money so that you can keep trading and learning.

Your focus

So if you are not going to make any money, what are you going to do that first year?! The first steps of a trader consist of getting familiar with the market and the market dynamics, you should look for a decent mentor (more on that later) and start studying as much as you can.

You should pick ONE method or approach and start putting all your focus on that one approach. Over the course of your trading career you will most likely go through several systems and try out different things, which is normal, but you should stay away from frequent “system hopping” and changing your approach every month.

It’s important to develop the right mindset and stay away from gambling and the get-rich-quick promises.

Demo trading?

Demo trading has its place and is certainly recommended for traders. Spending your first few months on demo and/or a backtesting software is necessary to familiarize yourself with the way the trading mechanics and market dynamics work.

Staying too long on demo, though, can have a negative effect. Demo trading eliminates the emotional aspect of trading and it does not teach you how to handle the real money pressure. Setting up a small (SMALL!) live trading account and getting your feet wet is a great way to practice. Just be careful that you don’t start gambling when your trading account is too small.

Learn about your tools

We have briefly touched on system hopping and it’s important to avoid this terrible behavior and mindset. You should AT LEAST give your trading method 6 – 9 months before you start changing it completely.

Also, really try to understand the tools you are using. Most traders use indicators or trading methods and don’t fully understand what they are doing. If you want to become a professional, profitable, full-time trader, you have to learn your craft.

Finding a mentor

Mentors are great, but they can also be the complete opposite. There are a lot of charlatans out there which make promises about the easy and fast money. Claims about doubling your account year after year, trading 2 hours per day and making “a killing” or other too-good-to-be-true claims are always that – simply not true.

What do you need a mentor for?

Almost all profitable traders trade a system they have somehow developed themselves – at least to some degree. A trading system is something very personal and it has to fit your personality and your character. Thus, do not look for a mentor who promises the “best returns”, but someone who can teach you about trading in general. Someone who builds your mindset, talks about trading psychology, the long-term concept of trading, helps you avoid common problems and prepares you for your journey.

Don’t confuse a mentor for a signal provider or just someone you buy a system from, but a person you can reach out to and who actively helps you become a better trader.

How to improve

Besides having a mentor, there are a few more things you can do to improve. There are fantastic trading books out there, written by the best traders of all times. You can pick their brains for a few bucks and learn from their mistakes. Here is our top 4 recommended reading list for new traders:

• Peter Brandt – Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading
• Steenbarger – Trading Psychology 2.0: From Best Practices to Best Processes
• Steve Burns – New Trader, Rich Trader 2: Good Trades, Bad Trades
• Marty Schwartz – Pit Bull: Lessons from Wall Street’s Champion Day Trader

Thanks to social media, some professional traders openly share what they are doing on a daily basis. We recommend following Trader Dante, Assad Tannous and the blog of NBT.

Obviously, recording your trades in a trading journal is also a must if you want to improve and get better. If you are not analyzing your past trades and trading behavior, how can you improve?

It is very obvious what your first steps should be

Your first steps as a trader should always be protection, protection, protection. How to protect your account and thinking about how you can lose less instead of winning more should always be your first priority. Even when you are a wildly successful trader, these will always be your first thoughts. What is the potential loss of any of my actions? The winners will sooner or later take care of themselves.

Staying in the game long enough to make it is the real challenge for newer traders. Burning through account after account will also cost you heaps of emotional capital and eventually you will simply give up.

Finding a mentor is not easy, but there are plenty of great people out there willing to help and give back. Sometimes they do it for free, sometimes they will charge for it. The important thing is that they care about you, they teach you the right things, and don’t promise you that you will succeed 100% after 6 months. If you hear something like that, just run.

References:

¹Barber, Lee, Odean (2010): Do Day Traders Rationally Learn About Their Ability?

From our work with hundreds of traders we found out that many traders have good intentions when they enter a trade, but once in a trade, things often go wrong. With Edgewonk we have developed a variety of different features and functions that analyze how you manage your trades so that you can find out what you should be doing.

When Edgewonk tells you what to do to maximize performance and minimize errors, it helps you avoid confusion and eliminates guesswork. Traders can then trade from a state of pure confidence and make much better decisions.

Set and forget – what to do in a trade

Especially for new traders, the “set and forget” approach can often make a big difference in their trading. Set and forget means that after you have entered your trade, set your stop and take profit orders, you simply do not touch the trade again until the stop loss or take profit is hit; the Trade Management area in Edgewonk analyzes your active trade management decisions.

The set and forget approach has two goals. First, it is the best way to build discipline. Once in a trade, traders are always hoping that a current loss could still turn into a profit or are worried that a current profit could turn into a loss. Then, these traders move around stop loss and take profit orders based on emotional responses and not based on sound price analysis. The set and forget approach forces you to sit on your hands and be patient – an important characteristic for every professional trader.

Second, in the Trade Management sheet of your Edgewonk trading journal, we analyze your potential performance. The yellow graph visualizes your performance if you hadn’t touched your trades after having entered them – the set and forget approach. This feature helps you understand if your trade management actions are really improving your performance or if they are making things worse.

Building discipline and identifying the best trade management approach are two things that can make a big difference in your trading.

Alternative Strategies – answering the what-if question

Traders are always wondering “what if!?” What if I would use a different stop loss strategy, what if I would apply another take profit method, what if I would enter your trades a bit earlier? Almost every trader has those nagging thoughts which can lead to sloppy trading and inconsistent results because they are always questioning their trading approach.

Edgewonk is aware of this immense problem and that’s why we have created the Alternative Strategies. With the help of the Alternative Strategies you can simultaneously analyze different stop loss, take profit, entry and trade management methods. Instead of opening a new trading account and tediously copying your trades using different ideas, simply analyze how a different approach would have performed and note the outcome in the Alternative Strategies. Edgewonk then compares the performance to your actual trading performance and you can see exactly what the best approach for your trading style is.

The Alternative Strategies are a time-saving solution to help you get rid of doubts and eliminate nagging questions. By understanding what you should be doing, you gain confidence and a new sense of clarity.

No more “what-if” and second-guessing

We at Edgewonk understand the struggles traders have on a day to day basis. By eliminating uncertainty and analyzing the best possible trading approach for your trading style, Edgewonk helps you develop new confidence which will then turn into much better trading decisions. A trader who does not have to worry about what he could be doing can focus on what is really going to make a difference in his trading – executing the best possible trades without having doubts.

Do you think you have problems with trade management and are not sure what to do once you are in a trade? Take a look at our 12-week trader development program where we help you uncover and overcome your weaknesses step by step.

Growing a small into a big trading account can be very hard. Most traders who start with a small account will not be able to turn their trading account into a size that allows them to make a substantial amount of money. But why is that? There are a handful of reasons why trading a small account is so hard and knowing what it takes to turn a small trading account into a big one can help you get there (much faster).

Realistic expectations

Wrong expectations are the main reason why traders with a small account don’t make it. It is important to understand that it will take a lot of time to grow a small trading account.

For example, trading with a $250 and risking 3% per trade means that you only make $7.50 on a winning trade with a reward-risk ratio of 1. Usually, those are not the returns traders are hoping for when they want to become professional traders.

Traders with a small account have to understand that making money should not be their main goal. The main goal when trading with a small trading account is to build your character, build a professional trading mindset and improve your strategy step by step. We will soon learn what all that means.

Build a professional mindset

Trading like a professional starts in your head. Being disciplined, following your rules and always seeking to improve your skills and your trading strategy are the cornerstones of professional trading. We at Edgewonk know about the importance of thinking like a professional and that’s the reason why the Edgewonk trading journal comes with a variety of different tools and features that help you along the way.

The Tiltmeter is the most popular psychological tool in Edgewonk because it acts like a personal mentor and shows you exactly how you are performing. A red Tiltmeter means that you have repeatedly broken your rules and made mistakes. A green Tiltmeter shows a disciplined trading approach.

In the 12-week trader development program, the Tiltmeter challenge is the first task we challenge our users with because it is the fastest way to build a strong and more professional trading character. And if you are trading with a small trading account, being disciplined and respecting your rules is of great importance; it lays the foundation to your future trading career.

Improve your trading strategy

Instead of risking more money, improving your current strategy will help you grow your trading account even faster. Edgewonk comes with dozens of tools and features that analyze your trading strategy and then provide actionable tips on how to adjust your parameters to improve your winrate, get greater winners, cut losers and get more profitable trades:

• Stop giving back profits and get bigger winning trades
• Improve trade management and make better in-trade decisions
• Professional position sizing step by step

At Edgewonk, we believe and have seen it first hand by talking to our users that instead of changing your trading strategy all the time you should focus on improving the one you already have. No system will work right from the start, but almost all systems can be turned into a profitable one.

This is what awaits you with a small account

OK, you know that you have to develop a professional trading mindset and improve the trading strategy you have, but what about the money? How much can you really make with a small trading account? The Edgewonk trading journal comes with a risk and performance simulator that lets you simulate your potential future trading performance.

The screenshot below shows a potential account development for a trading account with $250, a winrate of 60% and an average reward-risk ratio of 1.2. Those are relatively conservative statistics but the small trading account grows to a substantial amount of $12,000 – $26,000 on different simulations (the different graphs).

Doesn’t sound too bad to turn $250 into $26,000, right? However, there is a catch. For the first 300 trades, the account barely does anything and it grew very, very slowly. This slow-growth period is the time when most traders throw in the towel, ramp up their risk, look for a different system and deviate from their original plan. 300 trades with very little account growth can be hard to deal with and most traders will never get to the right side of the performance simulation.

Add to your account

Once you have proven that you can trade profitably for a period of time, you can think about adding to your trading account. And even if it is only $50 per month, it will help your account growth significantly. Turning a small into a big trading account is a hard and very tough grind. Traders need perseverance, passion and a desire to make it.

Here is our checklist that will help you grow a small into a bigger trading account:

• Realistic expectations. Be prepared to not make (a lot of) money for a long time
• Developing discipline and a professional character is the number one priority
• Improve your trading system steadily instead of jumping from one method to the next
• After you have proven to yourself that you can trade profitably, think about adding to your trading account
• Accept that trading a small trading account is a long and hard task
• Enjoy the process and develop a passion for trading to fuel your endeavor

If you are looking for help on your journey, take a look at our 12-week program where we help you understand the Edgewonk trading journal and walk you through the process of becoming a better trader.

How often have you started a trading journal with a lot of enthusiasm and then stopped after a few days or weeks? We hear this often and it’s a common theme among traders. But it’s not only limited to the world of trading…

Whether it is setting the goal to run every day for 30 minutes, start tracking your personal finances, doing some reading every night, meditating regularly, keeping track of your meals, or writing down your goals, almost everyone has tried to implement those good habits before…and failed. But why is that and why does it seem that some people can do it so effortlessly?

Every trader knows that keeping a trading journal should be very high on his priority list, and all successful traders highly recommend keeping a trading journal. But how can a trading journal turn you into a better trader, how will it help you and what are some tips that will allow you to journal help you not give up easily?

Journaling holds you accountable

Being a trader is a lot like being self-employed; you don’t have to justify your decisions and, in the end, no one cares about your success (or failure) as much as you do. As a trader, you are on your own.

There is a reason why people who have a workout partner or a personal trainer are more likely to follow through; large corporations have their reporting mechanisms for a reason as well. Once you know that someone will review your work and that you have to justify why you did or did not do certain things, you are much more likely to follow through.

A trading journal is what holds you accountable. We have talked to many traders and the majority reported that once they started using a trading journal, they were more likely to follow their trading rules and avoided repeating the same mistakes – because they knew that had to enter all their mistakes in their trading journal.

To make sure that you follow through, we developed the 12-week trader development program and we constantly check in on you and ask you to send us your progress to leverage accountability even further.

You develop self-awareness and learn about yourself

A trading journal is like a mirror that provides an honest view on your trading performance. It shows you immediately when you have repeated the same mistakes AGAIN; it shows you how much money you left on the table by making mistakes and it tells you what you should have done instead.

Edgewonk is like a personal trading mentor – it tells you when things aren’t going according to plan and it provides actionable tips on what to change. Once a trader starts seeing what he is doing wrong in cold printing, he is more likely to act on it. Most traders are not even fully aware of their mistakes or they forget about their flaws too fast because they have no way of keeping track.

Professionals do the things whether they feel like it or not

This is probably the most important factor that separates the professionals from the amateurs. Professionals do the things they know will get them to the next level, whether they feel like it or not.

Of course, it’s more comfortable to watch the football game tonight than missing the first half to journal your trades and going out with your friends is most likely more enjoyable than reviewing your trading week and completing your trading journal. But sometimes, you just have to push through and do the things you know you should be doing.

Nothing worth having comes easy but once you make the decision to commit to the “uncomfortable” things that you know will make a difference, you will feel great. Being disciplined empowers you and you prove to yourself that you are serious about something.

How serious are you about trading? It takes 2 minutes to become a better trader

No, we don’t have a get rich quick tip for you, but it’s close. We conducted a survey with some of our users and the majority reported that it takes on average 2 minutes to enter a trade into Edgewonk. 2 minutes! A trader who takes 10 trades per week only has to spend 20 minutes every week to keep a trading journal.

How serious are you about becoming a professional, full-time trader? Is it worth it to spend 2 minutes per trade to change the way you trade?

Professional trading is about developing good habits

What is it that professional traders do differently? It’s not that they have better indicators, know more price action patterns and they can’t predict market moves either. Professional and profitable traders work in an organized and structured manner. They prepare their trading day ahead, they do their market research, know their trading system inside out and they perform a post-trading analysis.

Now compare the average trading day of an amateur trader to the one of a professional. Most traders just randomly flip through timeframes and markets, hoping to find trades and once they are done, they close their platform and go do something else.

Adopting a regular habit and taking 20 minutes after each trading session to sit down and reflect on what you have done is the single best thing you can do for your trading. It makes you more self-aware, it adds a layer of objectivity to your trading, you build character and develop discipline by following through.

How to make journaling easier? 3 tips!

Instead of just saying that you have to keep a trading journal, there are certain things that can help you follow through:

1 – Reward yourself

For every week that you have successfully logged all your trades, reward yourself. How a reward looks to you is very personal. Maybe you feel great by just taking some time out over the weekend and sitting down with a good book; you can take your spouse to the spa; relax in the park with your family and stroll around; or go see a movie or rent a DVD at home and order some food in.

It is important to connect journaling to something positive and, regardless of your actual trading performance, do something that makes you feel good. Remember, professional trading is about building good habits. It will then automatically lead to better trading over time.

2 – Remove friction

People who exercise know this. When you pack your bag the night before or prepare your running gear in advance, you are more likely to exercise and coming up with excuses is harder.

When it comes to journaling, we recommend placing the Edgewonk application right onto your desktop and make sure to open it along with your trading platform. When you just have to switch tabs and are ready to journal, you are much more likely to actually do it.

2 – Build a routine

Having a routine and knowing exactly when it’s time to journal will make a big difference. Most traders operate in a reactionary mode and just respond to their outside circumstances. The professionals have a plan and set aside time to log their trades and perform a post-trading performance review.

In our 12-week program we help you develop a daily and weekly routine that will hold you accountable. You can also download our free timetable which will help you plan your week. The sample below shows how a structured week could look like.

Download the PDF template [Start Download]

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We are happy to announce that Edgewonk 1.6 has been released today as our early Christmas present to all our current Edgewonk users and everyone who is looking to join us.

1.6 is a major update with a lot of new features, improved analytics and many other new and exciting innovations. But enough talking, let us take a look at what is new.

Adding screenshots is now possible

The feature many people have been waiting for is now included in Edgewonk 1.6. You can assign individual screenshots to your trades. Edgewonk 1.6 comes with the folder “Screenshots” where all your trade screenshots will be stored. Simply add a new trade to your Edgewonk journal and select the screenshot of the according trade. This not only makes the review much more effective, but it also helps keeping all your trading in one place.

Tip: Edgewonk 1.6 comes with the folder “screenshots” which has to be placed in the same directory as the Edgewonk application (the file with the robot head) or otherwise Edgewonk won’t find your screenshots.

Adding the first screenshot takes a few seconds but the second one will be much faster. Excel needs some time to catch up.

Improved Equity Curve

In the background of the equity graph you can now see the visualization of your Tiltmeter. This way you can easily compare your trading performance to your level of discipline. Does your performance go down once you start breaking rules? Which are the mistakes that cause your equity graph to go down the most? Are your losing streaks the result of undisciplined trading? The new equity graph provides completely new insights into your trading.

Performance Tables – new metrics

Two new metrics have been included in the Performance Tables: Winning and Losing streaks. Now you can directly see the longest losing and winning streaks for individual setups and trades and also analyze your performance using all other Edgewonk filters.

Terminal

We have made Edgewonk’s interface slimmer while adding more functionality in 1.6 and moved the Overall Evalutions tab into the Terminal. We also added a few new statistics. You can now personalize Edgewonk by adding a specific name to the journal. This is extremely helpful for people with multiple Edgewonk databases and brokers.

Furthermore, we included weekly statistics of your current performance. You can also see the Tilt-status for your last 10 trades and get direct feedback about your current state.

New emotions-filter in all analytics sheets

All analytic tabs now include a filter that allows you to filter by emotion.

Simulator

The simulator and the simulated performance now also shows account volatility and the standard deviation of your returns.

Improved Comments and Tag Analytics

The visualization of the comments tab has been reworked. Instead of seeing 5 different graphs at once, users can now switch between the different statistics.

Complete office 2016 support and improved usability

Various bug fixes

Further improvements regarding design, usability and speed

And that’s it with the new Edgewonk 1.6 update. We want to thank all our users for their feedback and the great comments we have received so far. We value our customer feedback highly and it helps us make Edgewonk ever better.

If you are a current Edgewonk user, you can upgrade for free. By now you should have received an email with a new download link also instructions on how to transfer your old trading data into the new Edgewonk journal.

Are you curious now? You can test our free trial and see how Edgewonk can also help your trading.

>> Get the free trial here <<

Use the time when financial markets are in holiday mood and analyze your past year and find ways to improve your trading. The following points show you exactly how to end the year on a high note and how to position yourself for a great new year. “I wish I had been more committed this year” is a phrase that many people will say during this time of the year. Don’t let another year pass by without taking the actions you know will bring success. We show you how to make the next 365 days count, so that on December 31st 2016 you can look back satisfied and with improved trading results.

Step 1 – Find weaknesses and strengths in your trading – consulting the metrics

Numbers don’t lie and that’s why we consult the Edgewonk metrics first. But we go much deeper than just looking at your return data and see which direction your equity graph points to. Here are 5 important metrics from your Edgewonk trading journal and how to interpret them to get new insights about your performance and behavior.

Average Gain, average loss and risk

The average gain and average loss already tells you a lot. In your Performance Tables, activate the filter for winner and loser (separately) and take a look at the column “Avg. Gain”. A problem many traders have is that their general approach is promising, but when their average loss exceeds their average gain, it can signal problems that could be overcome quickly (we will dig deeper later).

The “Avg. Gain” column shows the average size of winenrs and losers

Then, take a look at your “Avg. Risk” numbers which are a proxy for position size and the highest potential loss on your trades. Again, if you see major differences between winners and losers, or if you can spot individual outliers on setups or instruments, it signals problems in your risk management.

The “Avg Risk” column is a proxy for position size and the maximum possible loss

The emotional aspect – the Tiltmeter

The Tiltmeter visualizes your discipline and your (in)ability to follow your rules. First, take a look at your equity graph and evaluate the red bars you can see in the background – they are the visualization of your Tiltmeter. Ideally, the Tiltmeter should be low; a decreasing Tiltmeter can also signal that your discipline has improved over time; or, can you see that when your equity curve goes down, the Tiltmeter rises? All those clues can help you find negative trading patterns.

Apply different filters to the equity graph to see how the Tiltmeter changes. When it rises the  lot, those are the times you need to work on yourself most.

Comments tab – Finding weaknesses II

The Comments tab shows the analytics for your tags, emotions and other emotional aspects. In the Comments tab you see how often you have assigned specific comments and also their aggregate performance.

Find the comments you have assigned the most and the ones with the worst performance. After you identified where you are leaking money, you can start working on your very own personal problems. Often, traders are not even aware of their problems and what is costing them money – Edgewonk takes out the guesswork.

Trading behavior – Trade Management

The Trade Management tab in Edgewonk analyzes your trading behavior, how you execute your orders and your trades in general. Often, traders see that their green Trade Management graph is above their red one which signals problems in your trade management.

When the green line is above the red line, your potential performance is greater than your actual performance; you close trades early or let losers run too long. Let your trades run without interfering with them and you can potentially increase your performance.

Achieving stable account growth – The Edgewonk Simulator

The Terminal shows your account volatility and the Sortino ratio which both provide information about risk and how (un)stable your account growth is.

Then go to the Simulator and take a look at your simulated future performance. The Simulator takes your current trading performance and simulates the outcome of 500 trades based on your metrics. Press the F9 key to start a new simulation. The Simulator provides insights about your potential account growth. Apply different filters to the Simulator and see which types of trades have the greatest volatility. Then, either avoid those riskier trades or work on their performance to smooth out your equity curve and to achieve a better growth.

A setup with a lot of volatility and unstable account growth.

Another setup with fewer drawdown and less volatility.

Step 2 – Be honest with yourself. A reality check

Honesty and self-awareness are two of the main attributes of professional traders and high performers. Only if you are honest with yourself, you can identify challenges and work on what is holding you back. Here are 4 questions that will help you grow as a trader:

Do you journal regularly?

How disciplined are you when it comes to journaling trades? Do you often skip your journaling sessions or do it half-heartedly?

Ask yourself: how much does trading mean to you? How much do you really want to become a professional trader? It takes 2 minutes to enter a trade into Edgewonk. Is it worth spending 2 minutes per trade to turn your trading around? Don’t let another year pass and then tell yourself “I wish I had taken 30 minutes each week to journal all my trades. I would be a much better trader by now.”

>> How tracking trades turns every trader into a professional faster

Are you still a system-hopper?

When was the last time you have changed your trading method and your whole approach? How often have you change it in 2015 alone? The professionals know that no system will work right from the start. Pick one system, learn as much as you can about it, consult your Edgewonk journal to find weaknesses and ways to improve it, and then make it work.

Do you listen to your rules?

How disciplined are you? Do you make the same mistakes over and over again? Do you learn from past setbacks or do you keep making the same things?

Most traders don’t learn from their mistakes and they are always operating in the amateur mindset. They break their entry rules, enter trades based on guessing, widen their stop loss, add to losers, take too much risk, change systems every month and gamble with their trading account. They don’t have a trading routine, do not keep a trading plan, don’t perform a pre-market analysis, don’t journal and do not review their past trades.

I always say you could publish rules in a newspaper and no one would follow them. The key is consistency and discipline. – Richard Dennis

Be honest. Does this describe your trading approach? We are not here to bring you down; we want to raise awareness about the common problems of traders. Use the end of the year to evaluate your approach.

Did you make progress in 2015?

Most traders try to sugarcoat their trading which keeps them from moving forward. Did your make progress in 2015 or are you just telling it to yourself? Are you continuously losing? Does your trading reflect the professional attitude you are after? Or are you gambling and hoping to somehow make this work? Do you believe that you just have to find the RIGHT system?

We know that the answers to those questions can be painful, but there is no other way to grow and improve. You don’t want to arrive at December, 31^st 2016 and still wonder why you are only losing money and not making any.

Step 3 – The right goals and moving forward

Now comes the part where you decide, based on how you answered all previous points, how to make 2016 YOUR year. Here is our top 5 list that will help you reach your goals faster and empower you to make significant progress in 2016.

“This one step – choosing a goal and sticking to it – changes everything.” – Scott Reed

1. Be methodical about your trading

What are the things you have learned about your trading by consulting the Edgewonk metrics? What are your greatest problems and what is costing you the most money? Now, make a list of your 5 biggest performance killers and put it next to your trading desk where you can see them. The change in your trading performance will be significant.

2. Create a trading routine

The reason why most traders still look like amateurs and beginners, even after years of trading, is because they do not follow a routine and are in reactionary mode. We have talked about the power of following a routine before and you should create your own for the year 2016.

>>  How to start your trading day like a pro [free download inside]

3. Become the expert in your field

This is an important point. STOP SYSTEM HOPPING. Your goal for 2016 should be to become the expert in your field. What is your trading methodology? Are you a trend-follower, do you look for breakouts, do you fade trends or do you trade based on fundamentals? Whatever it is, pick the ONE THING you want to be good at and make it work. The progress you will see if you are really committed and focus on just one thing will be huge.

“Be like a postage stamp— stick to one thing until you get there.” – Gary Keller

The Tiltmeter challenge

In our 12 week program, the Tiltmeter challenge is the first challenge because we know about the importance and the impact it will have on a trader’s performance. Whatever you do, always try to keep your Tiltmeter as low as possible. Focus on making the best trades possible and the money will follow.

Be realistic

Most traders have unrealistic expectations and dreams when it comes to trading and their own journey which then leads to even worse results and a lot of frustration.

If you can’t make money in trading right now, wouldn’t it be great if you could start becoming a break-even trader in 2016 and be more disciplined about your trading? And if you are an already experienced trader, you should look for ways to improve your edge to perfect your method.

Becoming a better trader is about making steady progress and always focusing on the next step. Having wrong expectations and then not seeing the results creates a negative feedback loop.

>> The 5 steps to becoming a profitable trader

Now it is up to you. Knowing what to do is typically the easy part – but actually doing it is what separates the professionals from the amateurs. How much do you want to become a better trader? And what are you willing to do for it?

We hope our guide helped you see the things clearer and that you now know how to approach your trading to turn the next 12 months into a period of success, growth and a lot of fun trading the markets.

Your Edgewonk Team

——

image credit: title image via unsplash.com

Scaling into our out of a position is a very common practice, but is it really improving the quality of your trading? Counter-intuitively, most traders do not improve their trading performance by scaling into or out of a position. Quite the opposite – most traders even worsen their performance. But why is that? Although scaling into or out of a position is done with good intentions, the execution is typically less than ideal.

Knowing that traders struggle with the right execution of multiple entries and exits, Edgewonk accounts for this common problem and we show you how the Edgewonk trading journal can help you unveil weaknesses in your trading.

Scaling into a profitable trade

Why you do it? The idea behind scaling into a trade is to “get your feet wet” by entering a partial position and once the trade moves into your favor, you add to it. Although this sounds good in theory, what really happens is often very different.

What really happens? Often, the initial position is too small because traders fear that they could lose money. Once the trade moves into profits, they lose their fear and add to a trade. However, after adding to a position, even a small retracement can wipe out the overall profits on your trade much faster.

Furthermore, the stop of that second position often has to go much further away and, therefore, reduces the reward:risk ratio of the overall trade. While adding to an already profitable trade can be a great way of building a larger position, if it is done for the wrong reasons and without considerations, it can ruin a good trading method.

Scaling into a losing trade

Although some traders will argue otherwise, adding to a loss should almost always be avoided. The argument that “I can get out faster when price turns” is often the last words of a trader before his trading account is wiped out.

Scaling out of profitable trades

Scaling out of a winning trade is also mostly done for the wrong reasons. Exiting a portion of your trade to “secure profits” sounds very good, but it is not. If you expect a reversal, you better exit your whole position and don’t gamble with the part of your trade you don’t want to exit. And if you don’t see any reasons why your trade could turn on you, you should leave the full position open to maximize your profits.

Scaling out of a losing trade

Unfortunately, most traders do not scale out of losers often enough, although this technique can often turn a trader into a consistently winning one.  Traders don’t even take this option into consideration and freeze when price moves against them.  However, exiting a portion of your trade means that you are reducing the risk as conditions worsen.

You don’t have to sit there and wait until price runs into your stop loss. Exiting some, or even all of your position ahead of the stop loss can make a big difference in a trader’s performance.

Edgewonk’s analytic approach

Taking out the guesswork

What we have said so far just describes what traders usually do and think, but it is important to validate those claims and analyze how it plays out in your actual trading.

If scaling into or out of positions is a big part of your trading, we encourage you to dedicate one Custom Statistic to tracking multiple entries and exits (examples see below). Later you can then separately analyze statistics for risk and position size, reward:risk ratio, R-multiple, expectancy numbers, emotional influences, etc. for multiple entries and exits.

Examples for Custom Statistics:

How to analyze your trades afterwards

The Edgewonk approach of using a separate row for multiple entries/exits sometimes worries our users because they believe that it skews their performance data by separately looking at the individual entries/exits. Don’t worry, we accounted for that.

Further reading: How to enter a trade with multiple positions

Fist, after you have set up your Custom Statistic as suggested, you can use those filters to separately analyze different types of trades. For example, the filter “No scaling” then only shows you the trades where your trade only consisted of one position. The filter “1^st entry, 1^st exit” only gives you the performance data for that first part of your trade. You can also combine different filters to see how your performance metrics change.

What to look for in your data

Now that you know how to track your trades and how to use the Custom Statistics, you can take a closer look at your performance data. There are 5 specific metrics we suggest consulting when you are unsure about the effectiveness of multiple entries and exits.

1 – Performance table: “Avg. Gain / Avg. Loss”

The “Avg. Gain/ Loss” column shows you immediately how you perform on different types of trades. A negative value on your second or third entries and exits immediately shows you that there is something wrong with your approach – especially if the first entry/exit or your trades without multiple positions have a positive performance.

Tip: Apply filters for Winners/Losers on your trades with multiple entries. It immediately shows you if you have a psychological problem. Do you add to losses or do you scale out of your winners too soon? The performance tables will show it.

2 – Performance table: “Avg. Risk (%)”

The “Avg. Risk(%)” is a proxy for your position size and it calculates the risk and the largest potential loss on your trades. Often, traders increase the risk on later entries by setting the stop too far away and then let their losses get out of hand.

Tip: Besides analyzing winners/losers separately, also use some of the other filters for entry, exit and trade management. See how your performance metrics change for positive and negative comments.

3 – Simulator

The Simulator provides insights into potential problems with your trading. A simulated account development with a lot of swings and many huge drawdowns shows that your trading method is potentially very risky.

Try to see how the simulated equity graph changes when you apply different filters for your multiple entries and exits. Is the account growth faster and steadier if you leave out the additional entries/exits?

4 – Trade Management

The Trade Management graph analyzes your potential performance. When the green graph is above the red one, it shows that your potential performance is higher than your actual performance and that your trade management is costing you money.

Again, play around with all different filters and combine them to analyze different aspects of your trading separately. Once you find outliers and negative performance parts, either consult the other Edgewonk metrics to improve your trading, or avoid those trades to increase your performance.

The Edgewonk Custom Statistics are the most powerful tool ever to be used in a professional trading journal – why? Because you can use them in any way you want and combine them with the already powerful Edgewonk evaluation tools – no stone will be left unturned when it comes to analyzing your trading strategy and performance.

Here are some usage examples to spark your creativity.

1. Timeframe

In the beginning of their trading career, almost every trader is overly concerned with the granularity of the markets. Should I trade 5 minute charts or daily charts? What is better? Which is easier? Where is less noise?

In the end, the choice of the trading timeframes comes down to personal preferences, characters traits and the time available.

Setting up one Custom Statistic to track the different timeframes can help you find out what works best for you and show you where you make the best trades.

2. Trading session

Volatility and liquidity constantly change when new information or money enters and leaves the market. Many Forex strategies that work during the Asian session will have trouble during the London & New York crossover for example. Also, different currencies behave differently during the trading sessions.

As a stocks, futures or CFD trader you probably know that price behavior, volatility and momentum can differ significantly between the time right after the open, just before the noon lunch-time trading session or afternoon.

It pays off to know during which times your strategy performs best and then focus on those sessions exclusively. This makes your trading more time-effective and more cost-effective.

As a Forex trader, we suggest setting up one Custom Stat to track the different trading sessions. And as a stocks or futures trader, you could set up a Custom Statistics that tracks the different intraday times: Open, pre-lunch, post-lunch, afternoon, pre-close.

3. Hour Of The Day

Edgewonk tracks and analyses your performance in relation to holding times of your trades. That way you can easily see whether you are holding your losers longer than your winners, a common beginner mistake.

If you have a strategy which, for example, opens and/or closes trades at the close of the hourly bar, you could track which hour performs best for you – this is a deeper way of analysing sessions, as described in the previous point.

4. Big Round Numbers / Quality Of Support And Resistance Levels

If, for example, you trade a break and retest strategy, you could track if a big round number (price levels ending with .00) stops your trades from reaching the take profit target or whether it does not influence your performance.

You could also track how many touches a support/resistance level took before you set your trade. That being said, you can of course also incorporate this information into your setup itself – just name it “2^nd retest”, “3^rd retest”, etc.

5. Trailing Stop & Any Other Trade Management Strategy

Almost no one trades the “Set & Forget” approach, mostly because you can do a lot of good with (professional) trade management – sadly, most traders don’t and abuse the term ‘trade management’ to make impulsive in-trade decisions.

If, for example, you want to know how your 5 EMA ‘trailing stop’ strategy performs, simply create a stat called “Trailing Stop 5 EMA” and you can then filter all the trades where you used that strategy to evaluate the specific performance.

In combination with the Edgewonk trade management sheet you will even see whether you would have made more profits if you would have let the trade run instead of trailing your stop loss.

6. Exit condition

Knowing why you exited a trade is important, but understanding how different exit decisions impact your performance, takes performance analysis to a completely new level. Here are a few examples of  how an exit condition Custom Statistic could look like:

7. Market Condition

Many traders endorse a top-down approach: they look for trends on higher timeframes and then for entries on lower timeframes in that direction. With the custom statistic you could track whether your trade is going with or against the bigger trend.

You could also track statistics like risk on/risk off, high/low volatility (based on VIX numbers), high/low liquidity or ATR (Average True Range) values; it’s up to you really and the possibilities are endless.

In our other article we showed you why tracking trend direction is a MUST. Don’t miss this secret tip.

8. Confluence

The more factors of confluence you stack in your favour in a trade, the higher the probability of turning a profit. You could either use this stat as a pure counter (2 confluence factors, 3 confluence factors, etc.) or you could use combinations of factors and tools, e.g. “Fibonacci 50%”, “Fibonacci 50% + Support/Resistance”, “Fibonacci 50% + Support/Resistance + MA Cross”, etc.

The important thing here is: You will quickly see which confluence factors perform better and which things do not impact your performance.

9. Price action or formation

Although you can add a screenshot to your trades that show the entry and the type of trade, it can pay off to dedicate one Custom Statistic to track the actual entry trigger. If you are a price action trader, you could use Custom Statistics for actual price formations or patterns; and if you are a indicator trader, you could track things like convergences, divergences, cross-overs etc.

10. News

News is a topic that is way underrated by most traders in the way that they simply ignore it.

If you do not follow news, and don’t want to, at least consider tracking whether and how your trade was influenced by high impact news. There are lots of great economic calendars out there, e.g. the one by Forex Factory.

Of course you could also track the outcome of the news (bearish/bullish, hawkish/dovish) and whether your trade was aligned with or against the news.

11. Psychological Factors

Psychology deeply affects our performance. Why not start tracking whether you had a workout before trading? Or whether you slept well? Or how you feel generally: do you want to trade, do you feel passionate about it, or do you only trade today because you feel like you have to trade? Maybe you feel depressed or overly happy?

It pays off to track these factors – and then create rules around them. Here are a few examples of psychology related Custom Statistics:

Conclusion: Dissecting And Improving Your Trading Strategy Has Never Been So Easy And Efficient

Trading is essentially an information war. You compete with incomplete information against other players with incomplete information. Whoever has the most and best pieces of information, puts them together in an efficient way, and then takes the correct action upon it, will win. Edgewonk helps you do just that. It will give you the right information and suggestions on how to react to that newly gained knowledge.

The custom statistics are the missing piece in the puzzle of any other trading journal. Some of the examples in this article come from our users; if you have found a great Custom Statistic usage example, we’d love to hear from you in the comments below.