Comparing planned R to actual R on every trade, where execution leaks

[Fairman]

Comparing planned R to actual R on every trade, where execution leaks

I added two columns to my journal: the R I planned for a trade, based on my entry, stop and target, and the R I actually got. Differences between the two show where execution is leaking.

On winning trades, the actual R was often a bit less than planned, because I closed early or got a small slippage on the exit. On losing trades, it was sometimes a little more than one R because of slippage on the stop or because I moved it. Separately these look like small things, but together they were a noticeable part of my result.

When I split the leaks by cause, early exits turned out to be the biggest one. I was taking profit before the target on setups where I'd planned to wait. That's a behaviour problem, not a market one. The slippage was smaller and was concentrated around session opens.

Now I know where to focus. I'm working on holding to the plan for the exits, and I'm avoiding entries at times where slippage is worse. I'll post an update in a month with how the gap between planned and actual has changed.

[Fairman]

A detail on how I split the leaks by cause. For every trade where actual R differs from planned, I add a short tag: early exit, late exit, slippage on entry, slippage on stop, moved stop. After a month I count the tags and add up the R lost for each. It sounds like extra work, but it only takes a few seconds per trade, and it showed me very clearly that early exits were costing more than everything else combined.

[Fairman]

For the early exits, what I am trying now is setting the take profit order the moment I enter and then closing the platform tab or looking away. If I am not watching every tick, I am less tempted to close early. I still manage the trade if something changes, like a news headline, but I am no longer reacting to every small wiggle against me. Too soon to say how it is going, but I will update. Leaving the trade alone is harder than it sounds.