If you bet, keep a record of your winnings and losses. Everyone is capable of keeping a log for a week or so but I’d estimate less than 5% keep a record for longer than 6 months. The reason for that is that most spreadbettors lose and who wants to keep a record of losing bets!
I’ve mentioned several times the importance of record keeping, and it’s true to say that you will have a difficult time checking your progress or making any improvements to your betting unless you keep good records. Some people rely on the printout statements from their spread betting firm, and this to me is totally inadequate. A journal properly kept allows you to develop and improve. Although it works for many people, I would even go so far as to eschew the online form of journal in favour of a written book, as this makes you think much more about your actions. You can print out the charts that you saw, and annotate them with your notes before sticking them in, and you will have a good record of your reasons for taking each bet.
The typical data that you want to have in a journal includes the opening and closing prices, the ticker code, the type of set up you saw, the actual profit or loss, the percentage price change over the bet, and the number of days the bet was open. That, together with a chart showing the conditions, provides a record of the hard facts.
You should also keep, if you like, a psychological record of your betting. It would include your hopes and fears, how you felt about each bet before, during, and after it has run its course, and even the time that you placed the bet, as this can affect your trading. Don’t forget to include whether you had a hangover from the night before, if you think it affected your decision making. You do not need to show your journal to anyone, and the more personal you can make it, the more you may find out about yourself, and how best to spread bet.
With that said, one of the most common mistakes when writing a journal is to fail to record what the market is doing. It’s easy to become so focussed on your own actions and feelings that you neglect to talk about the environment that you are betting in – of course, whether the markets are jittery, buoyant, or in a depression has an effect on your observations and outcomes. It may be a good idea to print out a market index each day so that you have it for reference. Certainly paying attention to the mood of the market will train you to better anticipate where the opportunities are going to be.
You may also find that you are documenting your mistakes or failures in more detail than your successes. You want a good record of your best bets so that you can look for common threads and ideas. It also helps to even the balance psychologically, otherwise you will find that reading the journal may start to depress you, and you will find excuses to avoid doing so.
Your journal can also be a record of your specific plans for the day, and how you intend to bet. In effect, it can give you your business plan for betting, based in part on what has been working recently as recorded in the log. This way you keep organised and focussed on what is working for you, and have a history that you can refer to when you encounter similar circumstances again.
Your trading log should never degenerate into a commentary that beats you up about your mistakes (or losses, these are not the same thing), and then leaves you feeling helpless to improve. Take care to identify any steps you feel you should be taking. For instance, you might write in it that you need to cut out of your losers more quickly, before they become significant amounts, and note that you failed to do that on half of your losing bets. That’s no real help. Much better to put down something positive about how you can improve this aspect, such as you intend to be more disciplined in your approach, and set an alert on each bet as it approaches your stop loss level to remind you to watch for an exit.
Finally, apart from the individual betting figures and how you felt about them, it can be useful to compile the week’s numbers into overall counts to evaluate your general approach to the markets. For instance, you can see how many long and short bets you placed in each week to tell if you are trying to trade against the trends, which is not usually recommended. The number of bets placed gives you a comparison number for different weeks so that you can tell if you are trading more on weeks which are less successful, or perhaps over-trading. Your winners will probably outnumber your losers on most weeks, and if you pay attention to this figure you may find that you it points you towards a need to re-evaluate your strategies for a changing marketplace.
Another useful parameter to watch through the weeks is the average amount of time that you hold onto your bets. Again, if you can see a correlation between this and your winning/losing ratios you may find pointers for improving your system. You can also break this down into how long you hold winners, and how long you hold losers, which may indicate a surreptitious move towards hanging on to losers, for example, which you can nip in the bud.
Your journal should not be some hasty scribbles at the end of the day. Depending on your trading technique, you may find that you do not have time for detailed writing while you are betting, although that is the best to capture your thoughts at the time of trading, rather than massaging them later after you see how the bet turns out. But your journal is tantamount to a business plan, and if you are to take spread betting seriously, as a business, you must find time for it. If it means taking one less bet so that you can complete it, then it is time well spent.