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Diary of a trader - Rule of 10,000 hours

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Today's article is devoted to such an important instrument as a trader's diary. One of the key components of successful trading is self-discipline. If binary options are just a game with money for you, you can skip this article. It will certainly seem boring to you. For everyone else, I'll talk about how and why some traders are successful and some are not.

In fact, there is no secret. In 2009, Forbes magazine published an interesting article, entitled "Rule of 10,000 hours." The article showed results of a study on whether certain people’s talent is random or is the result of a huge amount of experience and effort. The research was conducted among violinists and pianists who began studying music at about the same age, but after20 years, some of them had achieved outstanding results and some hadn't. Interestingly, the researcher didn’t find any musician who could achieve significant success doing less than their peers. Moreover, the best of them over20 years had had more than 10,000 hours of training.

So, why do so many novice traders devote time to finding magic indicators, instead of improving already proven strategies?

All you need to start earning, is experience in chart analysis, and the only way to learn to trade profitably is to begin to record your transactions. It's boring, tedious, and not everyone can handle it, but if you're not even willing to learn, why do you think that you can succeed on your own?

As somebody said, "if you get stuck, go back and start again." In order to begin gaining experience, analyze your mistakes and don’t forget about them; it is necessary to keep a trader’s diary.

How to create a trader’s diary?

On the Internet, you can find dozens of ready-made trader’s diaries.

They usually include notes such as the following:
• Asset: The asset the trader uses. It's no secret that each asset behaves differently. If you have statistics of which assets are the most profitable for you, you will be able to focus on them
• Direction: Which way you bet (call or put)
• The amount of investment: This will help you manage your money
• The time: Expiry time and time when you buy an option. This will help you choose the most appropriate time for you and most profitable expiration according to your strategy
• Result: Will calculate the final amount of profit
• Conditions: Write the conditions of option buying. Any strategy is a set of rules. When following all the rules, you will be able to analyze how the strategy is profitable. You can create additional conditions or remove the previous ones, but most importantly, you can analyze the number of profitable trades obtained as a result.

Of course, the trader’s diary aids with discipline, checks if you follow all the conditions when buying options and helps analyze your progress in the long term. It is unlikely that you will be able to remember how and what options you bought a month before, two months ago or even years ago.

I advise you to create your own diary in the format in which you would prefer. You can do it on your PC, on paper, with screenshots, or with chart profitability, but it's worth doing as it will be convenient for you personally. Good luck!

Comments

@FreemanZ's picture

I agree with you. Diary realy helps. I always make the notes how the US dollar responds the statistics (specially nonfarm). Then it helps to determine how much points the price can reach. Mostly I use this way for Touch options.

@FreemanZ
SanPaulo's picture

Yes, trader's diary helps to analyze the mistakes. It usually seems that the price should go up, however, when compare the previous reaction of the price, you see that it will go down. You buy PUT option and it's in the money.

SanPaulo
jaffa's picture

Yes you are so right. The trader's diary is the one of the most important tools, it could help in many issues indeed.

jaffa