In order to properly explain our view of the importance and functionality of this journal as part of a trader’s tool-kit, it is appropriate to ask, “If you are stranded on a desolate island, what are the two things you would want there with you?”
In the world of trading it is not uncommon to feel lost and stuck trying to navigate the markets, and all great traders agree that by keeping a journal of your trades, one can get to the bottom of the single core concept you rely on and use to guide you through this financial maize, and that is your trading personality.
It is no secret that the bulk of traders out there are not profitable, also the market has not changed in centuries and the same human emotions driving behavior back then is still firmly in place today. With fear and greed clouding one’s ability to think, relying on a trading system has become a key to trading success.
Pages can be written about the various types of systems that are out there, arguing in favor of one over the other, however, this review will not delve too deeply into that notion. Instead, the key take-away is this:
- If we can’t trust our emotions, we need a system to help us make crystal clear, calculated decisions.
- Yet if everyone is using a system, why do so many traders still fail to show consistent profits?
The answer to this is two-fold.
First, we need a measure of determining the validity of our system and its signals, in other words, something to judge the value of our system given that, in all honesty, all systems aren’t created equal and some trading strategies and systems are nothing more than a camouflaged roll of the dice.
Secondly, we humans are known for overriding systems. We constantly put our “gut feel” or “hunch” ahead of our analytical results, constantly doubting our systems, processes and personal experience. To be clear, trading rely quite a bit on one’s intuition, honed over many years staring at graphs, news feeds and price action, so instead the measure is not to validate or discredit, but instead one need to understand and measure how often do you deviate from the plan, and how successful was that particular endeavor. With the markets inherently driven by statistical events, one cannot expect every hunch to pay off.
“The trading adrenaline does diminish over time and with experience. The objective is to rid yourself of it – totally”.
A good trading journal therefore should have the ability to both analyse the effectiveness of one’s trading strategy or system, and at the same time provide guidance and insight as to the emotions behind the trade as well as indicating how often do you deviated from your own system, and the resulting outcome of it all. In other words, when all is said and done we need to be able to determine what caused you to pull the trigger? Was it a signal from your system, fear, greed, caught up in the hype and adrenaline of the moment … boredom perhaps?
A JOURNAL OR A PSYCHOLOGIST IN DISGUISE?
Edgewonk’s Trade Journal has an uncanny ability to identify your trading personality. It cuts straight through the noise at an alarmingly efficient pace. After only entering a few trades, the system already pics up how much trading is done by the “system” and how much by your “gut” – much like having your very own personal trading psychologist on hand!
Investopedia quotes Mind Pattern Modification (Method to Change Habits) as one of the key reasons you need a trading Journal. Edgewonk has what it refers to as a “Tiltmeter” which is a visual representation of how good you are at sticking to your system, and how often you let your emotions get the better of you. The Journal is also unbelievably efficient in identifying losing streaks.
This brings us to another question. Ever wondered what to do when you are on a losing streak? Without documenting your actual trading activity it will be near impossible to identify the source and course correct when on a losing streak. Tradimo suggests that the following questions can all be answered by keeping a dedicated trading journal:
- Has the system stopped working?
- When should I stop trading with this system?
- Should I just keep trading despite losses?
With traditional trading journals one can argue, getting to the root of the problem will in all likelihood take quite a bit of time and analysis, and in the end still be quite tricky to pin-point. How long would it not take to scan through hundreds and hundreds of trades, analysing the various components of each individually in search of the answer?
Not having quick answers at your fingertips could result in many undesirable conditions such as:
- Hesitation to add any new trades
- Not knowing the correct position size of the new trades (if any)
- The urge to “go big or go home” – i.e. risking too much in the hopes that the next trade, if profitable, will make back all the money lost.
- Deviating from the system, or worse, total abandonment of a profitable system
Edgewonk once again excels at providing crystal clear, quick and concise guidance on all these points.
INSTALL AND SET-UP OF THE JOURNAL
The Journal itself is an Excel based platform, and requires an initial download of a ZIP file. Once un-zipped, entering your access key (which is obtained via the click of a button) unlocks and registers the Journal for your availability and immediate use.
The download comes in 5 versions, one each for Forex, Stocks, Futures, CFDs and even Spread Betting! The journal is available in both 32 and 64 Bit versions. Included in the Zip file is a detailed PDF manual. However, this journal is so user friendly and easy to set up that a quick stop over at Edgewonk’s YouTube Channel will provide all the guidance needed to get you up and running.
The instructional videos are all quick and easy, loaded with a ton of value and clear instructions and visual guidance covering everything from install to initial setup, and more. It is highly recommended you start your journey there.
PERSONALIZING THE JOURNAL
Before entering actual trade data, Edgewonk allows you to customise the entry types in order for the journal to be personalised reflecting your own instruments, strategy names, trade types. The personalisation does not stop here. Unlike most other systems, Edgewonk requires you to assign an emotional score or rating to the various entry, exit and position management conditions. This allows for the power behind the Journal not only measuring the numerical results but also state of your “trading psychology”. Needless to say this ability will be a huge draw for most traders as you can capture the moment with a click of a button, and all the emotion of historical data can now be clearly visible.
Powerful Analytics Coupled With User Friendly Interface
This review will not go into every single function or analytical tool the Journal has on offer, this can very easily be evaluated by visiting Edgewonk’s YouTube Channel, instead we will highlight some of the key factors which we feel makes this Journal stand head and shoulders above similar Journals in its price range.
Apart from navigation tabs at the bottom and sides of each screen, when it starts up the Journal welcomes you with a “Terminal” interface which allows for very easy navigation. What was surprising about the Journal was the ease with which data is analysed, grouped and displayed allowing you to have all the relevant information to be available with the touch of a button. An example of this is the Journal’s Performance Tables.
Analysis can be done on a macro basis covering your entire portfolio of positions, showing overall winrate %, Return on Equity, Average Risk %, Updraws and Drawdowns etc. You can assign entry and exit times to trades and even go as far as analysing the effect of various holding times on your performance. In short, all the information you would ever dream to have is right there at your fingertips.
What makes Edgewonk super powerful, is the fact that with a click of a few buttons you can with the greatest of ease, analyse one particular security for example to see how you are performing, or better still, one particular trading strategy or signal, traded across numerous securities, evaluating its profitability and risk.
This is an amazing function which will enable a trader to pin point securities and strategies or signals that have historically performed the best, or alternatively, which securities or strategies to exclude going forward.
Another differentiator offered by Edgewonk is its Trade Management Tool.
Famous Market Wizard, Bill Lipshultz was quoted as saying:
“I don’t think you can consistently be a winning trader if you’re banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time” – New Market Wizards by JD Schwager
This sounds far easier to implement in theory than in practice…. Until now….
Edgewonk’s powerful trade analysis and management tool pin points the areas where your system and/or trading style is failing. It allows you to perform analysis on real data of your historical trades and graphs the outcomes, based on your actual results compared to:
a) leaving the trades “unmanaged” as per the original trade plan, and
b) your active management and adjustment of trade dynamics throughout the life of the trade.
It quickly highlights any misalignments resulting from management of the trades (or lack thereof) based on your particular trading strategy, style and frequency.
It shows exactly how much money is left on the table, and better yet, by implication it guides you towards what needs to be amended on future trades to bank maximum bang for buck on every trade. A truly mind-opening function resulting in nowhere to hide, clearly indicating if you are adding or deteriorating value by fidgeting with a trade throughout its life, when compared to the original expectations at inception.
Edgewonk is the answer to figuring out how to make money, knowing you’ll only be right on some of the trades, and provides a proper blueprint on how to deal with the losers.
We started this review by stating that a good trading journal should have the ability to both analyse the effectiveness of a trading strategy or system, as well as identify the key driving emotions behind our trading. We believe that Edgewonk has done just that and manages to over-deliver on both!
Edgewonk is extremely user friendly yet super powerful in both trade analytics as well as trade psychology. It enables you to track 300 different instruments and up to 50 different trading strategies and setups. It gives you a personalized look behind the scenes, lifting the veil of what truly is driving your trading decisions and actions. It shows you not only what works, but also what doesn’t, and in doing so provides a quick and accurate blueprint on how to improve your trading performance.
At the current price point of $119 for the Pro Version and no additional monthly fees this truly is a ton of value, they also offer a free trial for users to play around with. You will be hard pressed to find another Trading Journal packed with this many bells and whistles as Edgewonk. The entire Forex Alchemy team agrees, this truly is a must-have for every serious trader and deserving of a 5-star rating.