How To Use The Trade Management Tab Correctly
A trader who isn’t working on his trade management approach is usually leaving A LOT of money on the table. From our experience, and from working with hundreds of traders, we know that wrong trade management can make the difference between a losing and a potentially profitable trader. Just think about all those trades where you moved your stop loss too close and got taken out before price went for your target, or took an early exit and missed out on a big move.
We at Edgewonk know about the importance of trade management and the problem of micro-management. That’s why Edgewonk comes with a powerful trade management analytics feature. Finding out what you should be doing with your trades once you are in them is not easy, but with our trade management add-on it’s possible and you can take out the guesswork.
Introducing the trade management sheet
In the trade management tab of your Edgewonk trading journal you can see 3 graphs: blue, yellow and red.
Red/Orange: This is your actual performance, measured in R-multiples (what is R-Multiple?).
Green: The green line shows your potential performance. The potential performance is based on the “set and forget” approach which means that you avoid any trade management and simply let your trade run after you have entered it and set your stop and take profit.
Yellow: The yellow line visualizes how much you are losing or winning by actively managing your trades (more on that below).
Optimizing your trading behavior to improve your performance
Interpreting the trade management curves and finding out how to increase your performance is “where the magic happens” and it’s where you can reap the benefits from journaling your trades.
In the Edgewonk screenshot, we split the trade management graph into two parts; in the first part, the green graph is above the orange one which means that the potential performance is greater than the actual performance. The trader is losing money by ineffectively managing his trades. Then, he stopped messing with his trades (read below for the set and forget approach) and the orange graph moved above the green one.
Set and forget
The way Edgewonk has been built is that it compares your current trading performance to the “set and forget” approach, where you enter your trades, set your stop loss and take profit orders and then let your trade run without interfering with it again. From our daily work with traders we have seen that micro-managing trades and constantly fiddling with trades is one of the main reasons why traders make mistakes and lose money.
Whenever the green graph is above the orange one, like in the example above, you simply just have to stop micro-managing your trades and believe in yoru first analysis and let price do its thing.
Taking out the guesswork with Edgewonk
It is fairly easy to know that you are doing something wrong by looking at your account balance alone. The real power is knowing WHAT you did wrong and HOW to change it. The way the Edgewonk trading journal is designed, it helps you find out what you are doing wrong and under which situations. In your Edgewonk journal you can apply the different filters in the top and so analyze your trading very specifically and only focus on certain parts of your trading. That way you can find out when you are making your worst trades and when you are making good trades.
Throughout our trader development program we show you exactly how to improve your trade management and we take you by the hand so that you can find your edge and become a better trader.