Why keep a trade blotter?

What’s a blotter?
It’s a record of every single trade you take.
There are several automated online systems that can track your positions and give you pretty reports on your performance.  Even my broker, between the trading platform and the statements, does a good job giving me a sense of how I’m doing.

However, with each system that I have tried, there was always something missing so I created my own.  A simple spreadsheet, a summary of which you can see under the blotter tab.

The basic version should includes:

  • entry date
  • exit date
  • security
  • contract quantities
  • entry price
  • exit price
  • profit/loss
  • stop price and associate cash at risk
  • potential target price and associate cash reward

I have added some personal points in order to…

a)  slow down my thought process an analyze my decision making and

b) to analyze my own performance after the fact.

Here are the additional inputs I have added:

  • a system to decide how much to risk on various types of trades
  • a way to calculate the total margin at use (this is a little more complicated b/c margin rates change often and I don’t like to keep up with them).
  • a check on markers of trades that I should consider before entering (i.e., Is it based on closing price? Is there clear support/resistance? etc.)
  • comments on fundamentals
  • comments on technicals
  • comments on the exit, similar to a journal describing what happened and my feelings about it.

I said a simple spreadsheet… it’s actually pretty rich with information.

The blotter becomes super helpful in tracking my portfolio from a risk perspective while the trades are still on.  I track the total cash at risk, worse/best case scenario, total P+L for specific trade ideas where I have executed through multiple trades, success rate of specific types of trades, how long I stay in trades, what markets I traded best, and more.  Especially during negative trading periods, going back to the blotter helps me identify positive and negative patterns in my behavior that can be improved.

Lastly, going through the sometimes tedious process of filling in the info before each trade, helps me slowdown against overtrading, which for me is still the biggest challenge to successful trading.

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