Introduction
Embarking on the CAN SLIM trading method almost two years ago marked the beginning of a fascinating and challenging journey. In this reflective piece, I’ll delve into the meticulous record-keeping, the evolution of my analysis techniques, the harsh reality check of underperformance, and the invaluable lessons learned along the way.
Keeping the Books: The Manual Chronicles
From day one, I understood the significance of maintaining detailed records. Armed with a pen and a notebook, I meticulously recorded every trade—entry and exit points, rationale behind decisions, and overarching market conditions. This manual chronicle was not just about numbers; it was about capturing the narrative of each trade, providing insights that transcended the data.
The Art of Record-Keeping
Keeping detailed records wasn’t merely a task; it was an art. Each trade’s story unfolded on paper, allowing me to trace patterns, identify strengths, and address weaknesses in my trading strategy.
Evolution in Analysis: Unveiling Nuances
As months rolled by, I realized the need for more nuanced analyses. Introducing additional columns to my trading log, I delved into the intricacies of each trade. Questions such as “Was this an ideal buying point?” and “Why did I buy the stock at that time?” became integral, offering a deeper understanding of my decision-making process.
Beyond Entry and Exit
Analyzing trades meant going beyond basic metrics. It involved understanding the psychology behind decisions, recognizing patterns, and adapting strategies for continuous improvement.
The Reality Check: A Humbling Underperformance
Despite meticulous record-keeping and evolving analyses, a harsh reality check awaited. While aware of a down year, comparing results to major indexes revealed a stark truth. The broader market was thriving, yet my account showed a downturn of around 10%. This dissonance sparked introspection.
Lessons from Underperformance
Acknowledging underperformance is a powerful lesson. It prompts a closer examination of strategies, risk management, and the need for adaptability in dynamic markets. In further topics I am going to analyze more deeply some of my best and worst trades.
Benchmarking: Learning from Market Dynamics
Comparing results to market benchmarks isn’t just about numbers. It’s a strategic move to understand market dynamics, identify outliers, and reassess one’s approach.
Competence vs. Results: Navigating the Dilemma
Engaging with the trading community showcased a paradox. While feeling competent and knowledgeable, results didn’t align. This incongruence led to a profound realization – expertise doesn’t guarantee success in the unpredictable stock market and also, thinking that you are an expert when having little or no field experience can be misleading.
The Human Element
Trading is more than numbers; it involves human psychology. Understanding the emotions, biases, and mental challenges is as crucial as market analysis. My experience shows that getting emotional is the main root cause things go south.
Emotional responses can serve as valuable signals, suggesting that a trader may be operating under incorrect assumptions or has taken on a position disproportionately large relative to their wealth. Such instances necessitate introspection to identify underlying issues, followed by necessary adjustments to the portfolio.
Continuous Learning
Competence is a foundation, but the market’s ever-changing nature demands continuous learning. It’s an acknowledgment that there’s always room for improvement.
Development often involves learning and practicing new nuances. My experience has shown that nuances and seemingly minor details are the most important. For example, the right buying spot, correct interpretation of charts, the right selling spot, position size, etc. Initially, one might think that certain aspects can be overlooked, but whether or not these nuances are considered determines how well one does in trading.
Unpacking the Errors: A Deep Dive
Recognizing underperformance fueled a determination to unearth hidden pitfalls. The analysis extended beyond visible errors, uncovering hidden costs, psychological nuances, and subtle errors.
Self-Reflection
Self-reflection is a potent tool. It’s about understanding the mindset behind each decision, acknowledging biases, and ensuring emotional intelligence in trading.
Hidden Costs
Trading involves more than meets the eye. Unearthing hidden costs, both financial and psychological, is critical for holistic performance evaluation.
In-Depth Examination of Errors
A granular examination of recurring errors and areas for improvement provides actionable insights.
Example 1: Buying Too Extended
- Instances where stocks were purchased more than 10% above the 10-week line.
- Reflections on violating CAN SLIM rules and the need for more strategic entry points.
Example 2: Volume Analysis
- Emphasized the significance of volume, particularly on breakout days.
- Acknowledged the impact of low volume on decision-making and the need for heightened awareness during volatile periods.
Example 3: Continuous Learning
- Accepted that the market is challenging, requiring continuous learning.
- Emphasized the importance of not taking advice from small investors without a proven track record.
Example 4: Detailed Trade Analysis
- Realized the necessity of going deeper into previous trades to uncover hidden costs and nuances.
- Acknowledged the value of evaluating stocks that were closed but remained on the radar for potential future opportunities.
Conclusion: A Roadmap to Improvement
In conclusion, analyzing past trades reveals a roadmap to improvement. Each example provides insights into specific trading situations, offering valuable lessons for future decision-making. The journey of a trader is not just about reaching a specific word count; it’s about continuous learning, adaptability, and refining strategies based on historical data.
As the analysis deepens, the aim is to extract actionable insights, cultivate a resilient mindset, and ultimately enhance the overall trading performance. The provided data has been a stepping stone for this exploration, and with a commitment to ongoing reflection, the path to trading mastery becomes clearer.
