In my second book, The PlayBook, I advocate archiving a favorite setup from each trading session. After each close, choose a best setup from the session that fits your trading style. Reverse engineer the variables of that trade. Archive this trade in a comprehensive format, perhaps like the SMB PlayBook. As traders we should build from our strengths, doing more or what works for us and doing it bigger, with more trading capital.
The first step is understanding what we do well. Study of our favorite setups after market hours and creating a system to do this is a best practice to improve performance.
This month $ETSY and $GDDY technical trades in IPOs were some of my best and I will archive and review them. $AMZN and $FB offered opportunity after earnings as well as technical swing trades.
While I was writing The PlayBook, I met with legendary trader Linda Raschke in her Chicago office after the close. While describing the book, she immediately interjected, “You have to include an example of a losing trade.” A losing trade that was also a good trade. So there is a chapter centering around a character Prep, and a losing but excellent risk/reward trade as a result of this advice.
We log losing setups if they are trades that make the most sense to us and still excellent risk/reward setups. For example, this month I made a losing 5k trade in $VLTC that was an excellent trade and we will archive. (expansive video to come soon on this $VLTC trade)
At the time I tweeted this about that $VLTC trade:
My sense is that the questioner is asking a very different query. It seems he is asking: Should we study our bad trades? No. We do not spend time reviewing our poor trades, ones that were just mistakes or poor risk/reward trades. We discard them. Again, we build from our strengths.
In the video below, I answer this question in more detail. I hope it offers some ideas to help you improve your investing/trading.
*no relevant positions