Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
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The beginning, as the proverb says, is half the whole…Aristotle
Of all the brilliant updates sent out over the past five years by John Lansing, founder of www.trending123.com, these words are among the most critical:
Your first investment: a 79¢ Notebook
Remember that a good trader is disciplined and always plans trades, and so should you. A failure to plan is a plan for failure!
- Why did you buy a stock?
- Did you have any issues with holding the stock as you waited for it to reach price target?
- Why did you exit the stock?
- Did you made a profit or a loss? And how much?
These simple notes enable you to identify your trading strengths and weaknesses.
After all, if you don't know what you're doing right, you can't develop the skills you already have.
And if you don't know what you're doing wrong, you could end up blaming "bad luck" instead of correcting bad habits.
Knowledge is power. Even better, knowledge is profits.
Especially if you're going into technical analysis.
It’s time to go back to basics, and a 79 cent notebook is about as basic as it gets. Traders must understand that trading is a business and that all businesses keep records. Your trading journal is your business record. It is also the way that you stay honest with yourself and everyone else around you who has a vested interest in your trading results. I have countless numbers of notebooks of every trade I have made since 1994. At the end of each year, I take my entire journal for that year and review every single trade I made. I then decide what I can do differently to improve myself and accelerate my trading profits for the next year.
Trade journals do not lie. They are like a diary of your life for the year. No matter what kind of notebook you decide to buy, buy the same kind every year and use them like you would a holy book. The entries in these journals are the story of your year of trading. They tell you how you managed your money; what kind of risks you took; when you were afraid to pull the trigger on a trade; when you were “rat-brained” into a trade and when you were disciplined; when you were lucky and when you were skillful. A journal acts as a mirror of your trading year and forces you to see yourself and your trades in the bright and unforgiving light of radical honesty. It seriously does not get much better than that!
In addition to the recommendations that John makes about what to put into the notebook, I add a number of other things. Most of these are, as you might imagine, psychological and physical, and include, but are not limited to:
- The number of hours that I slept, the quality of my sleep and the presence or absence of dreams.
- The presence or absence of headache or any bodily pain or discomfort.
- My general emotional state (mad, sad, glad, indifferent, irritable, anxious).
- Any situation that is going on in my interpersonal life that could or did impact trading that day.
- Deviations from my diet and exercise routine.
- How I felt before and after every trade (mad, sad, glad or indifferent—I pay particular attention to any indication of euphoria or disgust).
- What I did right/wrong and how I could improve the next time.
The factors mentioned by John, in addition to the seven that I have listed above, are all part of my trading plan.
Additionally, I make notes about times when there were technical challenges. Examples of these include trading platform disruption, loss of cable or wireless connection, inability to get through on the telephone to the broker, and times when I deviated from my cardinal rule and answered the phone while in a trade. I make certain that I have adequate backup for my trading systems and have a sign that says, “No Telephone!!” pasted right above my computer.
Anyone who trades for a living must get familiar with Murphy’s or Finagle’s Law. This state: If something can do wrong, it will—at the worst possible moment. There are a number of things that happen during the trading day over which we have little or no control. However, we can have contingency and backup plans. We may never use them, but we have to have them. They are analogous to insurance for our trading business.
When things go wrong, for whatever reason, it is always easy to put the blame on someone or something outside of ourselves. That has to stop—and stop now. When a business goes bad, look to the CEO, since the rot starts at the top and trickles down. If a trade goes bad, look to yourself, your journal, and your trading plan and strategy. Realize and truly accept that you are responsible, and do something to correct it. A journal is your due diligence. It keeps you honest and aware. It shows you that you do have control over what you think and do during the stressful and challenging trading day.
Even if you “pay up” for it and it costs you $17.99 instead of 79 cents, it is a very small price to pay for discipline, consistency and growing your profits!
Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending…Carl Bard
Until Next Time,
Good Trading and (Revitalized) Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
P.S. Every week, I send you a Trading Wisdom designed to make you better, smarter, more balanced traders. Today, I want to ask you, “How are you doing?” Please join me and your fellow traders at the message board and tell us which of my Trading Wisdoms have been most helpful in getting you on a path to profitable trading. How have you used my methods and insights to make big money or avoid huge pitfalls? Tell me what you think, and your favorite Trading Wisdom may be featured in my upcoming book! Stop by today!
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