Time & Price Algorithmic Trading: Journal

Summary

In this lecture, we explore the importance of journaling in trading as part of the optimization protocol. The script breaks down the key components of a trading journal in Notion, explaining how to track essential data such as trade date, market environment, session, order flow, and emotional state. By filling in these details, traders can continuously improve their strategy. The lecture emphasizes that journaling is essential for analyzing performance and optimizing future trades. The session concludes with a preview of the next lecture on optimizing trade data after recording 20 trades.

Takeaways

• 😀 Journaling is a crucial step for continuous improvement in trading. It helps traders learn from every trade and optimize their strategies.
• 😀 The journal setup in Notion consists of multiple columns to capture important data for each trade, such as date, environment selection, and order flow.
• 😀 Batch system is used in the journal, where every 20 trades are grouped together for easier tracking and optimization.
• 😀 Environment selection involves noting the economic calendar, whether there was high, medium, or no news, as it can affect trading performance.
• 😀 Intermarket relationship refers to checking if the market being traded is in sync with correlated markets like NASDAQ or S&P.
• 😀 Trade execution protocol includes tracking the entry type (e.g., inverse value gap or breaker), the invalidation level, and the target levels.
• 😀 Recording emotional states during trading is important, as emotions like fear or excitement can impact decision-making.
• 😀 The journal should also include screenshots for higher and lower timeframes, as these visuals help in reviewing trade performance.
• 😀 It’s essential to input detailed information like entry/exit time and net risk (net R) to analyze performance and identify areas for improvement.
• 😀 The goal is to complete 20 trades in the journal, after which optimization protocols can be applied to further refine the strategy.
• 😀 The journaling system is flexible, allowing users to add extra properties if they want to track additional metrics or preferences specific to their trading style.

Q & A

What is the purpose of journaling in the trading protocol?

Journaling in the trading protocol serves as a crucial tool for continuous improvement as a trader. It helps track each trade, analyze the environment, and evaluate outcomes to optimize the trading strategy over time.

What is the difference between the 'trade' and 'batch' columns in the journal?

The 'trade' column refers to the specific trade number, while the 'batch' column is related to the optimization protocol. The batch column automatically updates every 20 trades, grouping them into batches for easier optimization analysis.

Why is the 'environment selection' important in the journaling process?

The 'environment selection' is essential because it tracks external factors like news events that may impact market conditions. By categorizing the impact of these events (high, medium, or no news), traders can optimize their strategy for different market environments.

How does the 'order flow' and 'draw liquidity' help in decision-making?

Order flow and draw liquidity help in assessing market direction and identifying key price levels. 'Order flow' indicates whether the market is bullish or bearish, while 'draw liquidity' identifies fixed price levels or market structures where liquidity may be targeted.

What does 'point of interest' refer to in the trading journal?

The 'point of interest' refers to a specific price level or market structure that attracts attention, such as a discount or premium area. This helps traders focus on areas where they believe price action will be most significant based on market conditions.

What is the significance of tracking 'time of interest' (TOI) in the lower time frame protocol?

Tracking 'time of interest' (TOI) is significant because it aligns specific time cycles with price movements. If a Smart Money Theory (SMT) reversal occurs within the TOI, it can signal a potential trade opportunity, while movements outside the TOI suggest waiting for the next opportunity.

What should traders include when documenting their 'execution protocol'?

In the 'execution protocol', traders document the entry method used (such as inverse value gaps or breakers), the invalidation level, and the target levels. This section is critical to assess whether the trade setup was followed according to the plan.

Why is it important to track emotions during each trade?

Tracking emotions is important because it provides insights into a trader’s psychological state during the trade. Understanding whether a trader felt calm, fearful, or happy can reveal how emotions influenced the trade and whether it impacted adherence to the trading plan.

How does the journaling process help with continuous improvement?

Journaling helps traders review each trade in detail, allowing them to identify patterns, mistakes, and successes. By collecting this data, traders can make informed adjustments to their strategy, improving performance through optimization in future trades.

What is the next step after collecting data for 20 trades?

After collecting data for 20 trades, the next step is to move on to the optimization protocol. This involves analyzing the data, making necessary adjustments to the trading protocol, and then applying these insights to the next batch of 20 trades.