Case Study, Rahul: What Changed After Six Months of Honest Journaling

[Fairman]

Case Study, Rahul: What Changed After Six Months of Honest Journaling

Rahul is a composite character. For six months he recorded every trade with a setup tag, the planned risk, rule flags, and an emotional state. Before journaling, his results over 120 trades were an average of minus 0.10R per trade. After six months of review and changes, over the next 120 trades, his average was plus 0.12R. Look at what the journal showed him and how the numbers moved.

Discovery one: 22 percent of his trades were flagged for rule violations, averaging minus 0.60R, versus plus 0.15R for clean trades. Discovery two: his losses averaged 1.25R, because he moved stops. Discovery three: trades taken after two consecutive losses averaged minus 0.50R. Discovery four: one of his four setups carried almost all his profit.

His changes. Stops placed as server orders and never widened. A two-loss stop rule. Dropping two setups with no edge in the data. A pre-trade checklist.

Results. Flagged trades fell from 22 percent to 6 percent. Average loss fell to 1.05R. With a 44 percent win rate and an average win of 1.6R, expectancy is 0.44 times 1.6 minus 0.56 times 1.05, which is 0.704 minus 0.588, about plus 0.12R.

Change in expectancy: 0.22R per trade, over 20 trades a month, 4.4R a month, about 4.4 percent a month at 1 percent risk.

None of it required a better entry method. Every change came from the data about his behavior.

Lesson: the cheapest improvement is often measurement.

Exercise: list the three things your own journal would most likely reveal, then check.