I was out on the West Coast interviewing some candidates at UC Berkeley last Friday. It sure was nice out there! Mid 70s in the middle of November, really? Oh boy do I miss that awesome weather!.

One of the interviewees with a bit of experience in trading his own account asked me a question that I thought was interesting. The candidate asked how we go about reviewing our work. This is a bit of a complicated question since there isn’t a standard procedure written for reviewing our work. People review their work in their own way. So I want to outline below how I go about looking at mine. If you care to share your method/metrics all comments are welcome.

Personally, I like looking at my work from a quantitative stand point and I also like to watch the recording of my trading day. There are many metrics that I’m interested in looking at closely. Namely, the ratio of positive to negative trades, my ticket average, avg gain and avg. loss per type of trade, avg. holding time per type of trade (scalp, support/resistance play, fade, trend, etc). I like to look at all of these things per stock and per time of the day (premkt, open, mid day, close, after hours). Quantifying your work this way allows you to get a clear picture of what you are doing well and what you need to work on. A spreadsheet or custom piece of software is a must for this type of analysis or you would be crunching numbers for a good while. Doing this by hand will most likely discourage you in the long run from finding out exactly how you are making/loosing money. So do take the time to get your own spreadsheet together.

Luckily we offer a piece of software, the SMB Chop Tracker, that crunches most of these numbers for our prop desk – A screen shot of the software is attached below. It also shows graphically what each trader’s day looks like. Ideally your day should look like an uptrend line with very shallow pullbacks. If you find that your day looks like a yo-yo then most likely your losses are as big or bigger than your winners. If this is the case 2+ times per week then your system/style needs a bit of tweaking. One of the best ways to find out what to tweak is by going back and looking at your tape from those plays where you are ripping it up.

The last thing I like to do after I review my work is to keep notes of the things I need to work on and plays I am trading well. I don’t care to write in as much detail the metrics for the day. I use these to get a feel for how well I trade a stock and to help me assess my strengths and weaknesses for the day. I also like to keep notes of the type of market I had in that particular day/week. Keeping a journal indicating these things will help you identify patterns in your trading. It will certainly make you a more consistent trader.

Reviewing your work is very important. When you are struggling this is particularly most useful. Like I said, if you can please share how you review your work. Happy trading.