Mastering Trading Analytics: Building a Feedback Loop for Success

It's important to have a feedback loop where you're constantly thinking about what you've done and how you could be

doing better. And the reason this is so important because if you're just taking random actions and expecting to get

improved results, you know, there's no feedback mechanism to say, "Hey, this action led to a better result and you're

just kind of floundering in the dark and unable to actually analyze your results properly because you're taking

inconsistent actions." The goal with trading is to make money over time. Our inputs, our stock selection, position

sizing, entries, exits, our full system. our outputs, our trade results, our performance. But what's very difficult

about trading is that there are a lot of external factors at play. So there's the market environment, news catalyst, you

know, tweets, Fed meetings, all these can impact whether a trade or a series of trades is successful over time. So

first, data collection. There's a few different things you can do. Could keep a daily journal/check-in where you track

your trades and and note them at the end of the day. Then on a per trade basis, you could have a sample trade input form

or you can import it from your broker. But the main thing is that you want to make it seamless, make it easy. So you

actually do this. So you have your data. Now what basically you want to organize by trade, calculate key metrics, create

visualizations, compare to historical norms, and then bas basically become a detective and draw conclusions based on

you know your data itself. Batting average, like I said, is your percent of your trades that are wins. So, if you

have 20 trades over a period and 10 are wins, you've got a 50% win rate or batting average. Uh, if you have uh 10

trades and you have three wins, you've got a 30% uh batting average. Here's the histogram performance. Basically, this

is using a sample size of over say the last month. This here on the bottom is basically the percent gain on the trade.

And then this here on the left hand side is the frequency. This is exactly kind of what you want to see for a good

system. So, this is a good example. You've got most of your losses right near the left side of zero. And then

you've got some really strong trades that are really working for you and moving the

[Music] needle. All right. Well, let's go ahead and get started everybody. So, welcome

again to another trader handbook webinar. Uh, today we're diving into the post analysis section. Uh, this is this

entire weekend is post analysis. Today is focused on trading analytics. Uh tomorrow will be focused on analyzing

individual trades. You know, assessing where you bought, where you sold, what improvements you can make and tweaks to

your rules. And you know, this this whole weekend, I think, comes together really nicely and is key to kind of

building in a feedback loop. We'll talk about that a lot quite a bit today. Um about, you know, creating a feedback

loop that allows us to improve over time. That's of course the goal. Uh we want to be improving with every market

cycle almost, you know, every month that we trade. and a feedback loop and post analysis is critical to achieving that

goal. Uh just a quick reminder here, if you haven't already, make sure to join the traders handbook list. Uh I'll be

sending out the trade analytics log that you'll see as an example later on today uh to everybody who's on the list. So if

you're not already on this, uh make sure to uh scan the QR code and join that. Uh it's pretty quick and easy and gives you

access to all all these additional bonus articles. Also, uh definitely want to emphasize to

pick up your Trader Handbook uh as soon as you can if you haven't already. Uh you know, if you want it on the release

day, you definitely want to order it quickly. Uh we've gotten so much great feedback. We've had thousands of people

uh submit their receipts and get access to bonus material. We'll be sending those out shortly. Uh but make sure you

pick it up and you can scan this QR code right here to do that. Uh here's a quick review from

Deepak Up. You probably know him uh from podcasts and presentations he's done in the past. We've also sent out and gotten

positive reviews from uh a lot of great folks. Mark Minervini, Stan Weinstein, but this is just highlighting, you know,

a good summary of, you know, the benefits of picking up the Trader Handbook. Uh he emphasizes that it draws

from the strategies and principles used by some of the world's top traders and distills complex concepts into

actionable steps that traders of all levels can understand and implement and highlights the model book chart here as

well. And this is really good to see. You know, this is our overall goal to save you time, help you along your

trading journey. And Deepo mentions here, it would have saved me a lot of time and cost mistakes if you had picked

up this book early on in his trading career. So, definitely pick this up and let us know in the chat right now if

you've already pre-ordered your copy. All right. Also, we've got a special offer. This will be the last

time that we offer this. If you pick up the Trader Handbook by the end of this weekend, you'll receive a $100 Trader

line gift card. Again, all you have to do is pre-order the book and then submit proof and you can scan here to go ahead

and do that. So, again, if you want a $100 Trailerline gift card valid towards a master class or other Trailerine um

offering, u make sure to pick up your copy here as well. I see a lot of people in the chat saying uh pre-ordered it

already, which is awesome. Uh so, great to see that. Uh for sure. All right. And it's pretty cool. It's coming out, I

think, in exactly 10 days pretty much from today. So, uh coming out very soon. Also, uh I really want to emphasize

this. This is more than just a book. What you get when you pre-order is you get an entire educational course that

includes the webinars that we're doing right now. Uh bonus articles and guides, the companion workbook, the weekly

charts model book, the base breakouts model book, the cell rules model book, the market cycles model book, an

exclusive Q&A with us, uh the trade line founders, and in addition to that, you also get bonus uh webinars right here

really focused on key setups for momentum trading. These are base breakout setups, earnings gapper setups.

who just did this one uh this past week, got great response, and next week we'll be doing the trading pullbacks webinar.

So, these are excellent, and you only get this for uh ordering and submitting proof. So, make sure to get yours in if

you haven't already. And if you've attended some of these webinars, let us know in the chat uh if you've enjoyed

them and and find a lot of value in them. Uh I know we got a lot of great feedback as we did them live. Uh, but I

think the model books and these exclusive webinars by themselves are amazing resources and you only get them

through pre-ordering uh the traders handbook. All right. And I just want to emphasize again uh the advanced pullback

strategies will be next this upcoming Wednesday. So make sure to pre-order and you'll be a eligible to join right

here. All right. And yeah, the gift card is eligible to be used on the trade lab, not DFW. Um, and the the bonuses will be

sent out through email. If you've received a confirmation, you're good to go. But if you haven't already, make

sure to submit your receipt. The link is in the description where you can submit your receipt. And Ry, maybe you could

drop that link as well uh one more time in the link uh in in the chat here. All right. Okay. So, with all that said,

let's dive right into today. So, again, welcome everybody to another Trader Handbook webinar. Today, we'll be

focusing on trading analytics and journaling trades. uh this will be a little bit of a quicker uh topic but

there's a lot to cover and like I said it's very important to build up this feedback loop in order to actually

improve as traders. Uh so this dives into chapter 10 and like I said before or I've said before all these web

webinars build on and complement key chapters within the trader handbook and this chapter 10 is kind of my personal

favorite covering post analysis how to actually calculate metrics how to actually you know analyze your results

all that. So let's go ahead and dive right in. Uh first I wanted to start with uh this quick quote here uh from

Elon Musk. It's important to have a feedback loop where you're constantly thinking about what you've done and how

you could be doing better. And the reason this is so important because if you're just taking random actions, we've

talked about building consistency in the past. If you're just taking random actions and expecting to get improved

results, um you know, there's no feedback mechanism to say, "Hey, this action led to a better result." and

you're just kind of floundering in the dark and unable to actually analyze your results properly because you're taking

inconsistent actions. So, it's so important to have this feedback loop in addition to having an established system

to start with and then you build in, you know, this level, this mechanism where you analyze the outcomes and decide if

any tweaks you made to your system actually improved the outcomes over time or you should just go back to the

drawing board and maybe try something else and we'll get into the details here um of uh this concept as well. So this

is uh you know Ryan and I are both engineering backgrounds. This is a very familiar diagram if you've taken any

engineering classes classes. Uh basically you have an input to a system. You have you know your rules or the

system itself. You have external factors disturbances that impact uh the results of the the steps taken by that system.

And then you have an output. And this loop right here is what we're really talking about today. This is the

feedback loop. And basically this is where you take the output and put it back into a process where you analyze

the outcomes based on how your system performs and then use that to tweak your system and tweak the inputs that you

make into the system. And the reason that this is so important is because if you don't have this feedback loop again

you would just have this input disturbance and output. there'd be no mechanism to actually analyze yourself,

analyze the outcomes of whatever inputs you had. And again, you just be floundering in space and unable to

really improve because you don't have that mechanism to uh analyze yourself. And I wanted to make this

slide here, you know, how do we learn and improve? Uh we make an action based on our current process and then see what

the outcome is. And then based on that outcome and our analysis of the process, we can tweak the process and make

another iteration and see if anything changed. And if the tweak improves the next outcome or outcomes, the tweak was

a positive one and that becomes the new process. If it does not, we can then try another tweak. And over time, this leads

to an improving process. Uh, you know, over the long term. Uh, but what's essential here and what I just kind of

mentioned is what's essential is the analysis of the outcome step, the feedback loop. Without it, we are lost

in terms of tweaks or our current system is working or not. And what is also crucial is we keep the inputs and

actions from the system consistent. Otherwise, changes in the outcome cannot be properly attributed to tweaks of the

system. Um, you know, we want to keep the inputs consistent because otherwise we don't know if it was external factors

that improved our results or just simply tweaks to the system. And to bring this all together because I know that's kind

of high level here. Uh, I want to give an example of uh, you know, something Ry is really good at uh, basketball um, and

and shooting a bucket, right? This is very simple. Uh, to shoot a bucket, say you're shooting a three-pointer. Uh, you

can launch the ball at a certain angle. that's an input and a certain force that's another input and based on those

two metrics and based on the the distance you are from the bucket your shot will miss or make it. So say you

you undersshoot the ball. How do you actually go ahead and prove it? Well, you want to notice by how much you are

missing the target and basically recalibrate the angle you're shooting or the force you're shooting again your

inputs and your system to shoot a little bit further and eventually make it uh into the bucket. But again, if you don't

have that feedback loop where maybe uh the there's a wall right here and you can't see the outcome, there's no way to

assess whether tweaks, shooting it harder, shooting it lower, shooting it higher are actually, you know, leading

to improved outcomes, making more buckets. So, you need to be able to analyze, you know, where the ball fell

relative to the bucket. And you know how this relates to trading is you have to be analyzing your results and assessing

whether what you're doing, your system, your process, your rules are actually helping you or hurting you uh in the

current market by analyzing your actual performance. So this just is a very simple simple system. Uh but you know

what's difficult about trading is that there's a complex system and this is where the difficulty lies

with post analysis. Obviously our goal just like to make a basket uh is to you know get get the ball in the hoop. Uh

the goal with trading is to make money over time. Our inputs, our stock selection, position sizing, entries,

exits, our full system. Our outputs are trade results, our performance. But what's very difficult about trading is

that there are a lot of external factors at play. So there's the market environment, news catalyst, you know,

tweets, uh you know, now you know Fed meetings, all these can impact whether a trade or a series of trades uh is

successful over time. So, it's not as simple as this system where, you know, the only thing that really controls it

is the force and angle of uh of your shot and then maybe there's some wind involved here. Uh maybe the type of ball

is uh the weight of the ball is is a factor. But, you know, trading is just much more complex and that's why it's

such an amazing challenge and that's why there's also just such an amazing opportunity. So the key point is that

it's very hard to directly in attribute outputs to anyone input when it comes to such a complex system. So we really have

to be very procedural about this. We have to be systematic and we have to analyze, you know, over long series of

trades to really get to the the meat of if any tweaks we did actually are improving our process. All right. So how

do we set up a trading feedback loop? Uh well, there's kind of two main aspects of it. Today's is really focused on

trade analytics. taking it from a high level perspective and then tomorrow the next webinar is focused on individual

trade reviews which is from you know a lower level uh you know individual trade level how you're you're processing

things. So first from a trade analytics level uh again you want to assess your overall performance and trends in your

equity curve. You want to do data visualizations on your trade performance. You want to identify any

system level weaknesses or improvements you can likely make. Then from an individual trade review level uh

obviously you want to analyze kind of your system execution. Did you follow your buy rule? Did you follow your sell

rule? And then identify any execution weaknesses or improvements and you know on an individual trade level see you

know could there be any tweaks I can make to my rules uh to then improve my process. Uh but you know this is much

more high level and this is a little bit lower level. Um and Ry I I recognize uh that I haven't let you talk about talked

about the importance of post analysis in general. Any thoughts on why it's so important to you know analyze your

trades analyze individual trade reviews to get that feedback loop? Yeah, in in anything you know that you do, you want

to look back and and see how what you know the the results are at the end of the day. And uh many traders, especially

the phase one and two traders that we um often talk to or uh do webinars for, they miss this most uh important part of

looking at what happened and why it happened, right? Uh so trading analytics initially especially in your first few

years uh all the way to I would say up to a decade is likely the most important thing that you will do to improve uh you

know uh improve and not make the same mistakes again and again. Uh many traders tend to do that and um I've been

through the same where I feel like something will happen at some time where I will just be a different trader when I

wake up the next day while the results for many years remained exactly the same. And what changed that was to look

at what I'm doing, why I'm placing the trades that I'm placing, why am I uh not improving and kind of seeing, you know,

periods of really good returns, but then uh giving it all back in the markets. And then the difference or where it

clicked uh was the fact that you actually go and analyze every single trade that you've

placed, why you've placed it, what was the outcome of those trades, and why that outcome could have been different

if you acted this, you know, in scenario A or B differently. So, it's all about self assessment, looking internally,

looking at your stats, looking at exactly ways to to list down, hey, I need to improve at this. I'm not good at

trading let's say in the you know the middle of the day to to get catch a trend reversal. I'm not good at trading

let's say uh when the market has news associated with it. I'm not good at trading when uh the market is simply

below the 50-day. So those observations uh will all come from the fact that you're doing you know um a deep dive

into what trades you've placed where you've placed them and especially the losing trades which will give you the

most amount of input and and then when you're you're actually you know allow you know you can curb your losses and

you're improving uh from that front then it becomes about why am I not holding the winners long enough as well. So it's

a whole journey in and of itself. But uh what's important is to look at the you know each thing that you're doing each

trade that you're placing. And that's I think something that trade you know phase one phase two traders miss and it

takes them quite you know a while to get that consistency or a phase three or

performance uh from the markets and their numbers. And and how often do you think uh especially beginner traders

should take a look at their data and keep tabs on their performance, study their equity curve? What would be a good

kind of cadence every every week, every month? What what would be kind of your your thoughts there? I think uh in the

beginning doing more is uh is much better. uh later on you could do, you know, once a quarter uh once a month uh

type of type of thing. But initially, if you're a stage one and two and you haven't figured it out, you're a boom

bust uh you know, essent basically you're you're you're having those moves to the upside and then you're giving it

all back. It's best to do that weekly. Uh if and then if you have a large down day to do it that particular day. Um

also have a list of weaknesses, right? There there are certain situations like you'll see traders say that I don't

trade bi biotech, I don't trade China stocks, I don't trade this, I oil and gas, I don't trade those are factors

where they're listing out their weaknesses, right? Some people are really good at looking at the

fundamental situation and making a a great assessment of where the market's headed and then some people are really

great great at technical assessment of the markets and and being really good at that. So finding your weaknesses uh is

really important because it allows you to eliminate situations where you're supposed to be trading and not supposed

to be trading in the markets um as well. And all that comes down to you know going through let's say you trade the

bond market for 3 months and you figure out that you know this is not for you because it's not achieving your

objective. Well that's something you just you know know in the back of your head or you write down and you say okay

I I don't like participating in this type of market. I know traders that only trade gold and they've mastered the gold

trade. That's all they do. Look at the gold charts, gold fu uh futures. They wake up, they day trade them, swing

trade them, position trade them, and that they know that market really well, how currencies influence that, how

headlines influence it, etc. Right? So, it's all about I think that that's most important. Uh a lot of a lot of us when

we begin want to do everything at once. We want, you know, when um uh, you know, companies in the retail space are doing

well along with uh Bank of America type of stocks, but then we want to be in those stocks. When uh growth is out of

favor, we want to do something else. And usually that's not the best way for you to to kind of excel and be great at

something. So, you have to pick a few spots where, you know, a few good moves that you have in the markets, a few good

moments that you feel you could trade really well. And then for us, me and Richard, it's that's growth stocks,

right? We're we're looking at high potential growth stocks that can double and triple from potential entry areas

while we keep keep our uh risk really really low. That means that we're not trading REITs. That means we're not

trading bank banking stocks for the most part. We're not tra trading utilities. So we've figured out okay these these

segments of the market fit the criteria what we're trying to achieve and these are segments that we can ignore. And

usually those you know as you gain more experience will become times where you take time off from the markets when you

know Levi jeans is going up and people think jeans are a new innovation thing. Uh whereas uh some company that comes up

in the AI space or the semispace is now innovating and doing something crazy that will you know help us from a from a

technological perspective. So those are two different ways and it you know so you got to pick those and make sure

you're clear about them and that all comes from you know analyzing your trades at the end of the day. Yeah. And

just to tell a quick story um the first time I ever did post analysis it was part of the class I did with Dr. Wish uh

when I first learned how to trade. Um, and this is very early in in 2019. And I I had done trades, you know, I had

gotten results, but you know, until until I actually looked at the data, I didn't recognize I was making the same

mistake over and over again and looking actually at the charts. And the mistake I was making is I was entering probably

two three days um late in the right stocks. So the right stocks that went up and went up 20 30 40% whatever in the

strong uptrend I was entering the right stocks but at the wrong time and until I recognized that I was buying you know

after it was already short-term extended and getting shaken out on a natural pullback maybe to the to the moving

average uh you know I I would just get shaken out of those stocks. Uh and so what I changed after that realization is

buying a lot closer to the 21 EMA, the contraction, the actual kind of start of the breakout move, the momentum,

momentum burst, people people call it, uh Praep Bond. Um but if I hadn't actually looked at my performance and

done the dirty work and actually went through different trades, I would have made the relation. There'd be no way for

me to recognize just by, you know, some magic perception that I was entering late all the time. I was just frustrated

because I was getting shaken out and then the stocks would go out without me. So, if there's a similar frustration

that you're hap that you're that you're experiencing, oh, I get shaken out all the time. Oh, my cell rule gets me out

and then the stock doubles from there. Actually go ahead and plot it on the chart and look at the data in your

spreadsheet and see what you need to change. Um, you know, a later change that post analysis helped me with is I

recognized I was in the right stocks and they were making strong moves with with with me, but you know, I wasn't getting

enough size in them for actually them to make an impact. Because in order to actually improve your equity curve, you

know, there's both the weight of your position size and then there's the performance of the stock. And if the

performance of your stock is great, but your weight is only 8% 10%. You're not going to get that performance, that nice

move that actually, you know, helps you out and and boosts your equity curve. So that's an improvement I had to make

where I boosted my weight, my position sizing, and that helped me during the stronger periods. So there are just a

few examples about how post analysis can help you. You know, there's stories of many market wizards where they were

frustrated maybe early on in their trading careers. They weren't having the success uh they wanted uh they blew up

accounts and then what did they do? They went back and analyzed every single trade they made over a year, two years

and identified their weaknesses and created rules and steps to improve on those weaknesses. and that's what turned

around their performance. So, this is really critical, guys. Uh, you know, this might be tedious or or whatever.

Uh, but, you know, it's really what's going to be the biggest lever to moving you from stage two to stage three is

recognizing the weaknesses you're making, especially regarding risk management or profit, you know, profit

taking rules and actually working to fix them. All right, so here's the actual agenda for today a little bit. We

already talked about the importance of having a post analysis feedback loop, but we're going to talk about some

different key metrics to track, how to actually collect data. You know, I think a lot of people just say, you know,

track your trades, but what does that actually mean and and how do we make it seamless so it actually gets done,

right? Uh then we'll talk a little bit about a trade log. We'll be sending you guys a bonus template uh later today,

the same one, you know, I'll be showing later on. We'll talk a little bit about equity curve analysis, performance

distribution visuals, and some other visuals you can make on your data. And then some few ideas of again you know

how do you identify the weaknesses by doing different studies on your data and seeing if tweaks you make uh to your

actual trades would have actually helped you. So this is the general agenda for today. All right. So first data

collection. Um you know there's a few different things you can do. Uh you could keep a daily journal/checkin where

you track your trades and and note them at the end of the day. Uh then on a per trade basis you could have a sample

trade input form. And we're going to show an exact example of this later on. Or you can import it from your broker. I

know there's software out there. You know, we'll be creating something with DFW. Maybe by the time you guys are

watching the this recording, we'll have that journal up and running. Uh but the main thing is that you want to make it

seamless, make it easy. So you actually do this, right? We don't want to say we're going to do this extensive post

analysis and do it once and never do it again because consistent um tweaks your process is better than trying to do

everything all at once and and just getting overwhelmed and and never looking at it again. You don't want to

hate the data collection process. You want to make it as easy as possible. All right, so this is a quick

example of a trade input form that you could make after every single trade. So, let me go ahead and zoom in here and

we'll go through the sections. And this QR code, by the way, uh you can scan that and it will actually uh show you

this right here. And then you could copy it very uh simply in Google Forms. This is actually how I created

this. And what's great about Google Forms is that you can actually log the data in a Google Sheets for you. So, it

actually kind of does a lot of that data collection and preparation process for you. But basically, you'd have a few

questions that you'd want to answer with any trade that you create. Uh you know, what was the stock symbol? What was the

setup you used? Base breakout, gapper, pullback. that might be something to track. You could also have an entry

tactic uh drop-down list here where you'd select one of those. Um then you'd want to of course put in your average

cost, the number of shares, your initial stop-loss level, and I think I added this one just because it might be really

interesting to look uh back at how this impacts the actual performance of the trade. You know, how confident do you

feel about this trade just from 1 to 10? And you know this would be some cool data to collect over time and say you

know over the course of 3 months you know uh trades where I had an eight or higher I made you know 12% on average

while trades uh five or below I only made you know 3% or actually lost money. This would be cool data to collect. So

again just with this trade input form you want to make this quick and easy. Uh you want to have it you know be able to

fill it out in under 3 minutes. Um but you want to in you know collect all the data that would be helpful for you going

back and actually tracking your trade. Then here just any additional notes about the trade maybe some thoughts

about the setup anything you want to remind yourself of when you go back and actually analyze this trade on an

individual basis. Uh so again this is a Google form uh and you can set this up really easily. These are all just kind

of long answer uh paragraph inputs. This is a drop-down uh input and you can actually scan this and you'll get and

let me zoom out here. Uh you can get um you can actually see this and for you and uh create your own Google form that

matches this. So this is a trade info form. Again this would be one way to collect your

data. Then another way would be to do more of a daily level a daily journal. Uh this is the one that I use uh and I I

track my my stuff using this. Uh basically I have a quick thing. How do I feel like I traded today? Uh based on

the execution, based on how I acted. It's not always about whether I performed well in that day or didn't

perform well. It's about how well I executed that day. Uh then new trades today and observations, existing

positions and daily observations, some quick notes here. Uh thoughts on the market, key themes that are standing

out. Uh bonus notes. So again, um this is kind of what I do on a daily basis. Ry might do something different and he

might organize a little bit different. Maybe use notion or something like that. Basically, you want to just create a

workflow that works for you. And this is one suggestion using Google Forms because I like it because it tracks

everything in a Google Sheets right there for you and makes things really easily to collect that data. And again,

you can scan this QR code and see this right there for you. Um, and you'll be able to you replicate that in Google

Forms pretty easy. All right. So, you have your data. Now what basically you want to organize by trade,

calculate key metrics, create visualizations, compare to historical norms and then bas basically become a

detective and draw conclusions uh based on you know your data itself. And you know once you have that data again

collected through your trade input form or you know some other method however you're tracking your data you basically

want to go ahead and analyze and calculate a lot of stuff we're talking about. So here are some key metrics to

track. Uh basically you've got your batting average, your win rate, what percentage of your your trades are

actually winners. You've got your average gain, average loss, your riskreward ratio, your max gain, max

loss. This can be helpful to identify the outliers and then also your trade duration. Are you holding your winners

longer than your losers? And then you want to also analyze from a high level your equity curve. And Ry definitely

want to hear your thoughts on that um about uh recommendations. Uh but we'll get into that in just a

minute. All right. So batting average. Batting average, like I said, is your percent of your trades that are wins.

So, if you have 20 trades over a period and 10 are wins, you've got a 50% uh 50% uh win rate or batting average. Uh if

you have uh 10 trades and you have three wins, you've got a 30% uh batting average. And definitely something that's

key is that many great traders have around 40% win rate um or even less. And the difference between, you know, how

can you have a tremendous tremendous results and be a market wizard with a 40% batting average being wrong six out

of 10 times? Basically, they're taking advantage of the asymmetric aspect of the market and letting their winners,

you know, really make strong gains for them and capping the losers so tight. So, yes, they might have a lot of

losers, but all those losers are minus3, -4, -5% while their winners are plus 10, + 15, plus 20. And then there's outliers

that are even, you know, a whole lot more than that. So, one winner can can basically pay for many, many losers. So,

again, it's not about being right, it's about being profitable and, you know, using that asymmetricness of the market

of, you know, using stop losses to cap your cap your losses uh to to really, you know, put that in your favor. And,

you know, uh it's not about the batting average. I think I think this is a common misconception especially with

newer traders that you have to have a 80 90% batting average to have success in the market. Definitely not true

especially for our style. You know a lot of people here today are trend followers and trend followers by nature are going

to have much bigger winners than their losers. But you know as trades are getting going and they're trying to

enter a trade and enter a trend you know there might be a lot of head fakes that could stop us out early on. But over

time if we catch you know the right trends that's going to pay for everything. Um, and what's also cool

about the batting average is it can be a good gauge for market health. So, say you have a normal uh batting average of

about 40 45%. You know, that's that's pretty good. But then there's a period where

it's 60 65% uh where it's a new uptrend and everything's working. That gives you additional confirmation that, you know,

it's a good market and you should be taking advantage of it as as as you can. But if you know you're just getting

stopped out left and right and your batting average dips to you know 35% even 30%. That's again a sign that you

know take a step back um you know maybe it's a very choppy en environment things aren't following through and you want to

be trading less. You want to be trading you know more defensively moving up stops more aggressively. So the batting

average can be a great gauge for um you know what the what the market health is as well. Uh Ryan, anything you want to

add on the batting batting average and and how you kind of use it um you know uh to assess your your trading? Yeah, I

think um you know one of the things that I I look at is just the last x amount of trades and how well those are working

and how well you know I'm gauging the market condition. I think the overall batting average is pretty much for the

you know most part on the lower end uh because of swing trading. It won't be, you know, 70 80%. That's crazy. It will

be 30 40% range. Uh because you're, you know, you're testing the market, you're uh seeing if you're getting positive

feedback on on your existing trades, etc. Uh for me, what's most important is the last 10, the last 15. Am I actually

in line with the current market action? am I on a losing streak of you know 5 6 7 8 9 10 trades in a row and I'm not

able to gauge the market condition well and then you adjust your position size etc according um to how you're you know

performing. Uh so for me it's you know overall I think what you said the number is going to be on the lower end. People

aim for you know um they really want strategies with 80% win rate 90% win rate. This has worked historically so it

has to work in the future. uh etc. But uh the reality of it is it's in the 30 40% range and what's most important is

how you're gauging the market now, not you know uh 50 trades ago if you were everything was aligning with your system

etc. So yep and I see a good thought by Lisa earlier when it comes to collecting your data. Um she mentioned that it

might be helpful to to include you know the time that you place the trade. You know was it at 9:35? Was it at 10:30?

Was it the end of the day? that can be very helpful as well uh in order to go back and see you know am I more

effective trading early in the session like I know Ry and and myself we like to trade early or do I actually have better

success if I wait you know uh until the end of the day to place trades so that's another good really good suggestion Lisa

and it's a good point that you know whatever you find helpful add to this form and then you can go back and study

it but uh again you don't want to make this too laborous because otherwise you're not going to do it but you do

want to collect some good data uh as Well, all right. I saw a question, you know, why why did we start with batting

average? Because even though it's not the most important key metric, because we're going to be covering all of these

and it's a it's an important metric to track even though the average gain to loss ratio is maybe more important, but

we're covering that second. So, we're just covering all of these. There's no real reason why batting average is

first. It's just probably the most common, so we wanted to address it right away. All right. So, average gain,

average loss. Um, and I think this is really important and I think something different that most people don't think

about. Um, I think you should track this both in dollars, percentage, and equity contribution. And I'll break down what

what each of those mean. You know, if you've got a trade and you have 100 shares, uh, and you know, you make

profits, which is great, and you make a $500 profit, that would be, you know, your your gain in dollars. U, but that

that that gain in percentage on that position might be only 3% or 4%. And then if that position size is really

low, your equity contribution might only be, you know, adding to your actual portfolio 02% if you've got, you know,

uh, a really a big portfolio. So the reason why you should track this metric in all these three different variants is

because, like I said before, uh, a big mistake I noticed early on is that I would have nice winners, but I was

trying to diversify too much and keep my position size too small. and the actual equity contribution of those winners

didn't really move the needle on my account even though they they were working well. So, uh basically by by um

by analyzing and calculating the equity contribution, the average gain equity contribution, you're kind of normalizing

everything based on position size and actually seeing what moves the needle. uh because a smaller a smaller position

in a HIMS or a TEM that goes up 50% for you um might have equal uh equity contribution to a slower mover a Netflix

um that that only goes up 10% but you you're willing to put 30% of your account in that because it's more of a

liquid leader. So I think um what my main point here is that it might skew your perception of your your trading if

you only calculate based on percentage or or in dollars. So, I think you should do all three of these to gain that

different point of view for all of those. Um, and Ry, do you want to explain that, too? Because I'm I'm not

quite sure if I'm getting across exactly what I'm saying. Uh, but yeah, maybe from your perspective, you can you can

explain that as well. So, it so if you want the the way I I do it is more percentages um because of the

just the fact that they're just easier. Um, I know folks tend to gravitate towards dollar-based like goals. Hey,

I'm making $500 a trade or I'm making X amount a trade. Um, I think that type of thinking for me at least didn't scale uh

really well because the bigger the amount gets um the the more you're kind of pressured, right? because you know

that your if your average loss is let's say um $11,000 it it it just doesn't grow in my

mind it didn't work for me so I kept it you know from a small account to a big account to managing money all of that I

focus on percentages a lot more because it was just you know easy uh 3 to 4% four to 5% etc so like uh and then it

gives you a ratio as well like if my average gain to my average loss cost ratio is always above let's say 1.2 2

1.3 I'm in a good space basically I'm doing something right and over a series of trades I will you know come out on

top right so it gives you that confidence when you do it uh from a percentage um in terms of um the equity

contribution uh formula percent gain gain multiply by position size um I me personally I I tend to keep it a lot

simpler uh than that I just have you know if I know my average gain over the last uh 15 trades is 8% and my average

loss is 2%. Time to press, you know, time to really go, time to really put on position size, you know, a really high

position size cuz something's working in the markets. My average gain to my average uh loss ratio is 4:1, right? Uh

when that skews back from like 4:1 to a one where okay, I placed a trade 3% loss, I placed a winner, 3%. Now I'm in

a 1:1 ratio. If I'm in that, that means the market's ether either, you know, my system and how I'm approaching the

markets that's level and it's choppy. So, I'm I don't have a real edge over X amount of trades again, right? So, that

that's how my thought process goes. I keep things very I guess as a swing trader, you're looking at daily charts

in a few months. From a analytic perspective, the the immediate, you know, monthly analysis and the quarterly

analysis are always based on last 20 trades, last 50 trades max, right? Because I want to stay in the moment in

the market ex um but that quarterly yearly analysis, that's where you can get into, you know, what's my bigger am

I is my whole system working right from a bigger 30,000 ft perspective. Is my system, you know, uh, performing the the

way I want it to? Why why do my losses get increased when the market cycle is about to end? How can I tweak my market

cycle system? Then you get into that true feedback, right? Which component of my entry tactic needs to be a little bit

better? Was I a little bit, you know, was I consistently late to trades on the charts? Where can I improve my entry

tactics to make sure my entry instead of, you know, $50 is around 48.50? Am I I'm a little bit early? Can I do that

consistently? So that's where the you know the math comes in on a bigger quarterly, semianual, and annual

analysis that you could do on your trades. So uh I hope that was helpful because that's that's how I kind of look

at it. So yeah, I think it's great. And just just quickly to calculate your average gain, average loss, you

basically want to sum up all your gains over a certain period. Maybe it's over a month sample size. and then sum all

those up and then divide by the number of winners. And very similarly for the losers, sum up all the the the losses

and then divide by your losers. And I'll also show how to do that. Um I'll give you a quick preview. So riskreward, this

is the next metric that we're going to talk about today. Uh basically, you know, once you've got your average gain

and average loss, divide the average gain by the average loss. And this gives you a sense of, you know, how much

you're gaining per your average loss. So ideally for swing traders probably two to one or a little bit more than two to

one is ideal. For position traders you want to be want to be bigger than that because you're going to have a lower

batting average and you want your winners to really pay for those losers. So swing traders two 2.5 to one you know

that's kind of what you're shooting for. Uh position traders a lot bigger than that. And this is really critical for a

longerterm compounding uh and also building in failure because it makes sure that you know losers can be paid

for by your winners. And you just kind of want to find the ratio that fits your style and and do the math and see, you

know, am I on the right track. Uh, and that's kind of the goal of riskreward ratio. So again, to calculate this, uh,

divide your average gain, uh, by your average loss. I'm curious to know if if if you guys have, you know, your

numbers, if you want to put them in the chat, it would be nice to see what people are at, you know, over the last 5

10 trades or even, you know, as a system. Um, and if you don't know these numbers, today's the day to kind of go

in and calculate it because you're you're trading based on unknowns or you don't really know what your outcomes and

results are, right? So, uh, if you know them, definitely place them in the chat. If you don't, it's a takeaway for you to

know exactly, you know, at the very least over the last 5 10 trades to know this. So, yep. Perfect. And then max

gain max max loss. Uh whenever you're analyzing a system uh putting on my engineering hat again, it's really

important to uh look at the outliers because that gives you a big sense of what's actually going on and and

probably areas that you can either improve a system or critical things that you need to fix otherwise uh something

bad's going to happen. So uh you know when it comes to trading it shows your upside potential and risk exposure and

analyzing the outliers can really identify you know the key things you need to change to improve your process.

So think about what went really right for uh you know a great trade that you had. Uh and then also if you've got a

loss maybe your average loss is about 3 4% and you have a loss that was minus 12% and it wasn't based on you know uh

you know external factors or or things you can't control. you really have to make sure you fix whatever, you know,

caused that loss. Uh so again, this is where you'll make the most breakthroughs, especially on the loss

side. If you improve your backside and and improve, you know, your risk management, it's going to be it's going

to really have a dramatic impact on your results. Ry, did you have something to add? Yeah, in terms of max loss that

there's another thing, you know, if if you have a max loss rule, uh and then uh when you're doing, you know, uh post

analysis and and you're not following that, that that's another tell, right? that hey I set a 7% I set you know

mathematically we spoke about in our earlier webinars that 7%'s where it kind of starts going really downhill for you

uh past that and you're climbing uphill. So uh if you had that and then you stopped following it and you place a

trade and then market went into correction you turned into this and that um that's also again that's the feedback

loop that you're not trusting the system that you put forth and you don't really trust the methods that you're following

and that in and of itself is you know um what causes many swing traders to not really make it to that phase three and

four. So, if you know, if you're learning a system, you're learning Oliver's system, Sen's uh system, um

you're you're looking at the trade lab and how Richard's doing things, etc., and you'll see that all of them have

that maxed loss rule or have this type of, you know, something that curbs their losses. Every single trader does that.

Every single good trader does that. And I think it's it's really really really important because I see many people, you

know, uh they go into a trade, my risk is 3% and then a month later they're down 30% and they're still holding the

same thing because they still believe in the company all of a sudden. So a technical setup that turns into a

investment is how you know is is not aligning with your goal. So uh making sure you know these are when you do just

analytics of max gain and max loss. It's also a check on are you actually you know uh committing to the rules that you

set in your system and are you checking off do you are you trusting the process of it as well and many tra traders lack

this this part of it where they don't they have this rule they have that rule but when it comes to implementation they

turn into investors right so if you're a swing trader position trader stick to it and and this feedback loop will also you

know be something that keeps you in check again and again. So again, phase one, two, do it often. Phase three,

four, uh, consistency, and um, uh, performance phase, you do it less because you have the numbers in the back

of your head um, at the same time. Yep. Excellent. Um, also I I think this is an important metric to track, you know,

duration metrics. So, uh, for your gainers, how how long are you holding them? For your losers, how long are you

holding them? Um, ideally winners are much longer than losers for both swing trading, swing trading and position

trading. I think, um, you know, I like when my losers, you know, stop me out the next day or even that first day and

then I'm out of the trade and can move that capital somewhere else. Uh, but, you know, typically, you know, my losers

are about two two days or three days on average and then my winners can be much more than that uh more more in the 10 10

plus range. Um, so this is really important to track and it gets you in the right mindset of a trend follower.

Are you letting your winners work for you? And then are you cutting your losers as soon as they you know show you

your your show you you know quick losses. Um then after you've collected your data and we'll show you uh the

actual trade log in just a minute. After you collected the data I think it's really helpful to do some different data

visualizations. This first one is something I really want to talk about and I think probably is new to a lot of

folks. Then there's different, you know, graphs and and charts you can make. Equity per trade, uh, you know, per

stock, u, percent gain per stock to try to identify those those, uh, outliers, performance versus setup. If you keep

track of what setup you use for a trade, you could actually track, you know, your performance versus that setup and and

see which setup is more effective and then lean more into those if if those are working. Uh, performance versus

entry tactic very similarly. And again, you can kind of ver get very creative at this and create different visuals that

help you and help you, you know, identify your strengths and your weaknesses. Uh here's the histogram

performance. So this is really important, guys. So uh pay attention here. Basically, this is using a sample

size of over say the last month. Um this here on the bottom is basically the percent gain on the trade. So you have

and then this here on uh the left hand side is the frequency. So we've got two trades of over 25%. uh we've got two

trades of about 10% 11% and you know so and so on. So you've got a few really strong outliers over here and then you

have your stop-loss hits over here where uh from 0 to -4% is the bulk of your losses um where you've got eight losses

that are down between -3.75 and - 2.5% and then you have a few that get a little bit past you know your your

standard stop loss and hit a little bit deeper. Uh so this is exactly kind of what you want to see for a good system.

So this is a good example. You've got most most of your losses right near uh the left side of zero. And then you've

got some really strong trades that are really working for you and moving the needle. Uh but there's still some area

improvement. You can see this outlier uh trade example here minus 10%. That's getting a little bit too far in terms of

your stop loss. So you definitely would want to go ahead and investigate this trade and say, "Hey, you know what

happened here? did I not follow my rule? Uh what what rule could I implement to prevent that? Um so this is a really

cool visual that allows you to identify, you know, all your outcomes and visualize it and see are you, you know,

are you building a successful trend following system? If you are, all your losses are going to be pretty close to

right near 0 to minus 4%. And then you're going to have some nice gainers that act well. And Ry, anything you want

to add on this graph that that might be helpful for for folks? No, it's just uh it's it's a good visual way of looking

at, you know, your winners and losers. If the left side is quite big um and you have towers on the left side and you

don't on the right, um that doesn't necessarily in this graphic mean it's a bad thing. It could mean that you know

you have the the your your winners are covering many of your losers uh in a big way. So in this case, Richard has the

you know 10% gain 11.25% 25% he has a 17% 20 21 23 and 25 I think exercising and doing the math of it uh just you

know coming up with hypothetical scenarios of the math you know and and saying if I have 10 3% losers in a row

and and then I have one you know 25% gain where does my math stand in terms of you know if I started at equilibrium

let's say at $20,000 or or $50,000, where is the where do I stand?

That type of, you know, doing that manual calculation just once will allow you to take losses a lot

a lot more frequently and you won't hesitate to take them because you know that your systems kind of searching for

a big winner uh in the markets. And when you catch that the the times where you no matter what you do, uh what system

you have, what type of market it is, and nothing's working, it will keep you motivated because you know the math

behind your trading. And once you know the math and you've done it manually and that's where for me it really really uh

clicked and helped me out a lot and uh is when you know your math you know you know the numbers of it. Um it gives you

a lot of confidence when you you know you take a loss and you're okay with it. You don't kind of hesitate. You don't uh

second guessess yourself. You don't you know that you know you've calculated your numbers and you know that once you

have that let's say a 25% gain or uh like a hood moving 52% in uh 14 15 sessions all the the the ones you know

the smaller losses that were less than 5%. Those are covered. and now you're really, you know, going for it. Uh, and

it I guess the the gist of what I'm trying to say is it keeps you motivated when you're on a losing streak. And

that's really really important um to to have in trading to to not be demotivated or get down um especially when when you

no matter what you do uh things keep you know not going your way. Yeah. Excellent. And uh I really want to so so

first I want to ask in the chat you know do you guys understand what this histogram shows and the value of it

because I want to make sure I think this is the number one visual that you should make on your data if you haven't

already. Uh so I want to see if there's any questions here be before we move on. Uh but this is really easy to make. I'll

actually go ahead and uh show it here in in uh let's see here. Let's stop here and

share screen. And there we go. So, this is the trade log template that we'll be sending out to you guys. These are, you

know, 10 sample trades here. Uh you've got buy date, entry tactic, buy notes, setup, cost basis. uh in blue is the the

numbers that you would have to enter yourself and then everything else is kind of calculated for you. It

calculates the R multiple equity percent change the percent change the dollar gain as well your portfolio value after

that trade and the the visuals over here would be on the second tab where this is portfolio uh versus trade number and

then this is the histogram right here. Uh so let me see if there's any questions uh so far. Okay, clear.

Awesome. Um, and then these would be the raw metrics. And I'll I'll go more in detail after we're finished the slides

with this uh trade log. We've also built in here a little bit of cost basis calculator because I know people have a

lot of questions, you know, how do you calculate your cost basis? If you have multiple buys, uh you can basically use

this quick cost basis calculator uh to do that as well. So, this is what we'll be sending to you guys in just a minute.

And it includes the histogram. So, if you change these trades to actually your own trades, it will calculate that for

you. Uh so let me go ahead and share the slides again. Perfect. All

right. So this is the next uh nice visual that could be helpful in addition to just seeing your equity curve over

time. It might also be helpful to do equity curve versus the trade and see which ones really led to really

significant moves higher in your equity curve and analyze, you know, was that a gapper setup when I normally mostly

trade um, you know, breakouts? If so, maybe I'll I'll I'll look to master that setup a little bit more. So, this can be

helpful visual as well. Um, and then this is kind of a something I'm just starting to do and this is something

we'll build into the um the deep view journal feature is analyzing your data with um you know with AI and seeing you

know what what observations does AI make based on your data. Uh this is something I fed it that same spreadsheet. It came

up with uh different uh advice here. Let me actually zoom in. So this is a very simple prompt. I

bas basically asked analyze this trade log and come up with key takeaways and suggestions. You could have follow-up

things. You can actually have it make visuals for you, make a histogram based on this data. And here's some

observations. You know, risk management is solid. Most losses are capped under 93% showing good discipline. Um, average

days are 11 for winners 11 days, average for losers, three days. You know, a lot of the setups I put in there were bases

and trading bases most trades, but the gapper trades had the best outcomes. So, that was the observation it made that

said, hey, maybe lean more into the gapper trades. uh entry tactics mo most over here. Um and you know this might be

need refinement. You know a lot of these entries didn't work out or were stopped out. So this can be really helpful to

get a second look at your trade and kind of have a you know trading coach that that's built in for you and you can ask

it follow-up questions and just basically talk to your data. So I definitely recommend trying this out.

you know, upload um once you've entered in your trades into that trade log. Basically, go ahead and upload it to

chatbt um and ask it questions about, you know, what improvements could you make? Uh what are your most effective

entry tactics, setups? Um you know, what are what are key things that you you think I should work on? Um talk to

chatbt and I think it'll come up with some really good uh you know, feedback there for

you. Okay, so let's go keep going here. Uh then equity curve analysis. Ry, you want to take this away and kind of talk

about the importance of this and how you do it? Yeah. So, the the I would say this is the most uh important

um visualization of your results uh in the markets. It's the source of truth. Uh it cannot, you know, lie or be

deceiving or uh there's no way you cannot not understand uh what you're seeing when you pull up your equity

curve. So, uh the first thing that you want to look at when you're when you're analyzing what's happening is periods in

the market when uh things are working for you. What's kind of how does that equity curve look? And then periods in

the market when you're seeing pullback, how steep is the, you know, your equity curve pulling back? Um as well, as long

as you have, you know, do that type of analysis. The second thing you want to make sure that you're you're looking at

uh on your equity curve is a higher low, right? You want to, you know, from one market cycle in that market cycle

webinar when we said, hey, the market cycle turns one, we want to position early in a market trend and we want to

get our, you know, positions on so that when that breath picks up and the initial floor of the market rises rises,

our equity curves see significant progress to the upside. And that's, you know, when you're when you're going to

the up uh when you see that spike, the equity curve spike, that puts you in the driver's seat. If you're not seeing that

initially and early in each market cycle that turns from a down cycle to an upcycle, that's something to work on.

That's something, you know, early positioning and the way you you you look at your system. That portion of it, I

feel, is really key because then traders fall behind. And once they fall behind, they start blaming the markets. they

blame their system. They blame everything else but themselves uh because they don't have a proper, you

know, market cycle system. The second thing on your equity curve is when you're off, you know, 5% off of highs,

10% off of highs, you have to lower down. It serves as a mechanism and and a feedback for you to take in that the

position sizes that you're now putting on should be way lower than when you were seeing, you know, an uptrend where

one position works and you finance the other one in terms of progressive exposure. If you're doing that or uh

when you're 5% off your highs, something has happened that's not the same anymore, right? So, if you still want to

be placing bets in the markets, placing trades in the markets, your position size has to reflect the progress that

you're making on your equity curve. So that what happens when you do that is that phase one and that phase two equity

curve diagrams that we presented in the early webinars for uh the boom bus trader um you are you learn to curb your

losses by lowering your position size and then eventually when you do that again and again you will then learn that

there are times in the market that you don't or should not be trading as well. So, um, all of these things when you

look at, you know, the source of truth for your trading, uh, is your equity curve, is it going up? Is it going down?

Is it going sideways? Is it 5% off its highs, 10% off of its highs? It gives you a lot of information as to what

which components of your system are supposed to kick in your position sizing system, where you lower it or make it

higher, etc. Uh, as well. So at the end of the day, you have to take a look at this. It's there's no other metric, no

math. There's no confusion when you're looking at your equity curve as to what's happening and what your inputs

and how they equate to your outputs as well. So um that's definitely, you know, if if you guys don't look at your equity

curves and you're being told that, you know, it's not a good way, etc., I would strongly disagree with that. It for me

turned things around uh quite a bit because I'm looking at the reality of my trading rather than thinking that things

are going to turn around without me looking at my own results or my own outputs uh from from the inputs that I

make which is the number of trades in the market. Yeah. Excellent. So especially if you're stage two a boom