【The Trading Chapter】 Episode 30: Add a "record" to your own trades? Objective evaluation of growth with the "Grade A" promising growth
In the last time (the 29th session), we faced the painful task of “stop-loss” to survive in the market with a humble mindset. Being able to implement stop-loss is the first step toward becoming a professional.
Now, when we were in school, whenever you took a test you would inevitably receive a “score” or “grades.” In any field, by taking exams and having your performance evaluated objectively, you can recognize your weaknesses and improve.
So, what is the “grade” in trading? Is it “how much money you made”? No, that’s not it. This time, I would like to explain how professionals objectively assess their own trades and turn them into fuel for growth.
1. Profit Amount = Quality of Trading, not
Most people evaluate the quality of trading by the amount of profit and loss. Certainly, showing the ups and downs of capital is important, but using that alone as the sole criterion for evaluating trading is not appropriate. Because sometimes you may earn by luck (even if you break the rules), and other times, even with perfect analysis and money management, you may suffer losses due to unlucky news.
Dr. Elder says this: “It is more meaningful to evaluate the quality of trading by comparing what could have been obtained in reality with what was actually gained.”
In other words, the true performance (grade) of trading is to calculate how much price movement you cut from the opportunities given by the current market environment at that time.
2. Calculate the “Trading Grade”