Judge the process, not the profit

A record by itself is just a list. It turns into feedback when you judge it. The trick is to judge the right thing. If you grade your trading by how much it made, you are back to learning from outcomes, which is the problem we started with.

So in this step, you grade the process and the profit separately. Then once a week, you look back and ask a few plain questions.

Grade the process: A, B or C

Give each trade a letter based only on how you ran it. Leave the result out of it.

• A: Your setup was there, you entered as planned, your stop was where it belonged, and you managed the exit by your rules.
• B: The setup was real, but you slipped on something small. You entered a little late, or you nudged your exit.
• C: You broke a rule that matters. No setup, no stop, a moved stop, or a trade after your limit.

Now the key part. An A trade can lose. A C trade can win. When you see "A, minus 20 points" in your log, that is a good day's work. When you see "C, plus 30 points," that is a warning. In poker terms, it is the habit Annie Duke calls "resulting" that this grade is built to block.

Keep the grade and the points in separate columns. Over time you want to see mostly A's. Points will follow your process or they won't, and the record will tell you which.

The weekly review

Once a week, sit down with your record and your screenshots. Twenty or thirty minutes is enough. Ask the same questions every time:

1. How many sessions did I trade, and how many trades did I take?
2. What share of my trades were rule kept? How many A's, B's and C's?
3. What were my total points on A trades, and on B and C trades?
4. Did I follow my session routine every day? Where did I skip it?
5. When I broke a rule, what was going on just before?
6. Is there one thing I would change?

Write the answers down. In a month you will have four short reviews to compare, which is far more useful than a vague sense of how things went.

Find the first rule that broke

Bad sessions are rarely one mistake. They are usually a chain. Maybe you skipped the news check, got caught by a fast move, felt rushed, and then took a trade with no setup to win it back.

When you review a bad session, look for the first link in that chain. The last mistake is often the loudest, but the first one is usually the cheapest to fix. In the example above, fixing the news check may prevent everything that came after it.

Change one thing at a time

When the review points to a problem, pick one adjustment. Just one. Maybe you move your session start ten minutes later. Maybe you add "no trades in the first five minutes" to your rules. Then trade with that change for a set number of sessions before you judge it.

If you change three things at once and results improve, you won't know which change helped. If they get worse, you won't know which one hurt. One change at a time keeps your record readable. It is the same reason we narrowed in the first place.

The takeaway

Grade every trade A, B or C on process, and keep that grade apart from the points. Review once a week with the same questions. When something goes wrong, find the first rule that broke, and make one change at a time. That is how a record becomes a teacher.

Do this today

• Add a grade column to your record and grade your last few trades A, B or C without looking at the points.
• Put a 30-minute weekly review in your calendar and copy the six review questions into your record.
• Pick your most recent bad session and write down the first rule that broke.

Check yourself

Answer each one in your head, then open it to check.