Mastering The Basics – The Bottom-Up Approach


We hope you are off to a good start with your new journal and already feel more comfortable using Edgewonk.

The goal of this lesson is to deepen your understanding of your Edgewonk journal and help you find out what you should focus on right now to make fast improvements with your trading.

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The bottom-up approach of trader development

Edgewonk comes with many features that can be used by traders of all different stages to tackle the different problems traders are usually dealing with. But when it comes to trader development, you should always follow the bottom-up approach to guarantee the best possible results. Bottom-up means focusing on the most obvious and impactful problems first, before getting into the nitty-gritty. Let us explain what this means.

If you still struggle with discipline and just can’t follow your trade entry, exit or management rules, looking for ways to tweak your stop loss, order placement or risk management to optimize your trades, is not recommended and it won’t help you become a better trader either.



Part 2 – Revisiting Egdewonk features for the Bottom-Up approach

In every field, the professionals and top performers are always the ones who spend countless hours repeating and trying to perfect the absolute basics and do not get lost in the details. If you haven’t perfected the basics, working on the advanced skills will have little benefit.

“What people don’t realize is that professionals are
sensational because of the fundamentals.”
– Barry Larkin

The following paragraphs summarize the 5 core basics of how Edgewonk helps you improve your trading and work on the trading fundamentals:


  1. Develop discipline and avoid making mistakes

Although a trading journal usually only analyzes your past trades and performance, the Edgewonk features provide early warning signals that can keep you from repeatedly making the same mistakes.

[fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] [fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] The Tiltmeter analyzes your trading behavior and how well you respect your rules. When a trader repeatedly makes mistakes, the Tiltmeter falls and visually indicates that something is wrong. It is then time to pause and reflect on what you did – remember the previous lesson.



  1. Break bad habits and stop making mistakes 

A major reason why traders continuously lose money is that they violate their trading rules, make emotional trading decisions and repeat the same mistakes over and over again. Being aware of how much you are actually losing and when you commit to certain mistakes is a big step towards professional trading.

[fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] [fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] Create your own comments and tags which describe your biggest challenges and most commonly made mistakes; find out under which circumstances you make the most mistakes.


  1. Control your equity curve to achieve your risk objectives

The Edgewonk Simulator takes your current performance and projects it into the future. It also performs a number of risk and performance calculations to provide insights about potential account developments.

[fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] [fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] We will get into the specifics later. For now, just take a look at the volatility in your Simulator to get an idea for how your risk impacts your performance.

BottomUp-Simulator-1Lots of fluctuations and graphs very far apart from each other – A trading method with lots of uncertainty and volatility BottomUp-Simulator-2

Individual graphs are close together – A trading method with fewer fluctuations and stable account growth


  1. Learn what to do during your trades

What if I hadn’t done….?” or “If I hadn’t done X, then I would be a profitable trader by now” are common questions and phrases thrown around by traders. Edgewonk is aware of the ‘What-if’ problem and the analytics evaluate specifically where you are losing money and what is causing you to lose.

[fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] [fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] The trade management analytics compare your potential performance to your actual performance and show you what to do.



  1. Not all trades are the same – comparing the comparable

Most traders trade a variety of different instruments and also have several trading strategies which they follow. Haven’t you also had the feeling that some strategies and setups work better on certain instruments than on others?

[fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] [fac_icon icon=”chevron-right” color=”#333333″ color_hover=”#333333″] With Edgewonk, all your data is tracked and analyzed separately for individual instruments and setups. This analytical approach and dissecting every piece of your trading enables you to find out exactly which trades and scenarios are unprofitable for you and which combination of parameters provides the best results.


The Bottom-Up challenge

This week, we encourage you to take a step back and revisit your trading journal and your behavior. We want you to identify your two most commonly made mistakes from the list above and major weakness. We deliberately ask you to narrow it down to two points in order for you to really focus on these two.

We want to remind you that you shouldn’t get lost in the details, but rather focus on the bigger picture and identify your real, personal challenges and weak spots.

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