Daily Report Cards
In my early days at "MBC", we were all pushed to commit to extensive trade review. Not sure we called it Daily Report Cards back then but we went over our executions and graded ourselves. I spent a massive amount of time on this, often staying hours after the close to get it done and then e-mail my work to Victor. Looking back, a lot of this felt like busy work where I didn't ask myself the correct questions. I focused too much on little things that didn't matter.
I've had a couple consultation calls where traders have asked me whether they should do a daily report card and whether it "actually helps".
My answer was the following: it depends... on whether you have a good answer key or not.
Imagine being 7 years old again. You just completed a multiple-choice worksheet of basic math questions like what is 5 times 7. Instead of the teacher grading your answers, she tells you to grade it yourself without an answer key. She instead points to several large textbooks and a computer terminal for you to source your answers.
Needless to say, a 7 year old may not have the skills needed to properly grade himself. That's why the teacher is there.
That's what a beginner trader is doing when he does his own daily report card. He's a 7 year old grading his own work.
So, what is the proper answer key for a beginning trader? You have to have a well defined strategy with clear right or wrong answers. What are your proven trading setups and what is the proper entry and exit strategy? Did you get into a shit trade that wasn't part of your strategy? This is a question most discretionary traders are unable to answer at all or their answer is incomplete with missing details. We just kind of pick and choose shit without a proper data set behind us.
You either need the backtested data or you need to copy a proven strategy from a verified winning trader. And there's your answer key. You can find setups and say "oh I get in at 30 minute lows" or "I got in 2 minute timeframe lower highs when RSI was 80 or higher" or whatever it is. That's your ideal grading--when it's properly framed within a well-defined system. You executed well? A+. Executed poorly? F.
The danger of not having a system* leaves you lost in hindsight land, where your grading ends up being roundabout hindsight analysis. If it worked, you're A+. It didn't work out, you're an F. That's nonsense. Sometimes good trades don't work out, even with proper execution.
*It doesn't have to be precise to a tee. We're not all meant to be algo traders. Just some structure backing you up.
Even if you're extremely conscious of yourself to avoid that, you may be like 23-year old rookie Pete--who initially focused too much on little tinker-y trading things that did not make or break one's chances of being a Consistently Profitable Trader. In my latest call, a not-yet-profitable trader was asking me about trailing stops--whether he should set an automatic trailing stop, a stop order that moves up depending on a fixed interval of profit capture. I gave him a detailed answer to directly address that but then I made sure to emphasized a more important point: this isn't the make or break work to establish yourself as a winning trader. To me, trailing stops fall into the category of little things that might make you feel better and stay in a happy state of mind. It's more important to focus on how the market is moving and why an exit signal may be optimal at any given point due to a change within said market, rather than just locking in based only on PnL.
More examples of little things that do not make or break your chances of consistent profitability: hot key setup, chart indicators, stock scan filters, office/computer setup.
To me this, this is fruitless work if you aren't yet profitable. You need to return to bigger picture questions like whether you have a proven edge or not, before you can even have proper daily self-evaluations. Get the data that says this is what you're supposed to do. That's your answer key to sharpen yourself.