Strategy and performance
Trade journal
A record of every trade with its reasoning, size, levels and result. It is the only way to find out whether a strategy is being followed, as distinct from whether it is working.
GFN’s figure
A journal is the check on GFN's 2 Step consistency rule before it becomes a problem: tracking each day's share of total profit shows a best day approaching 35% while there is still time to trade through it.
In detail
Trade journal,explained
The entries that matter are the ones recorded before the outcome is known: the setup, the planned stop, the planned target and the reason. A journal written afterwards records a story instead of data.
Recording results in R rather than dollars makes the sample comparable across account sizes, which matters when a trader runs several accounts at once.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
R-multiple
A trade's result expressed in units of its initial risk. Risking $200 and making $600 is +3R; hitting the stop is -1R. It makes results comparable across account sizes and position sizes.
Consistency rule
A rule capping how much of an account's total profit may come from a single trading day. It stops one outsized day from carrying an otherwise flat account through an evaluation.
Expectancy
The average result of a trade over a large sample, combining win rate and average win and loss. A positive expectancy is necessary for a strategy to work and not sufficient for it to pass an evaluation.
Maximum adverse excursion
The furthest a trade moves against you before it closes, whatever its final result. Measured per trade, it shows how much room a strategy genuinely needs rather than how much it eventually used.
Equity curve
A chart of account equity over time. Its slope shows the rate of return, its smoothness shows consistency, and its deepest dip is the peak-to-trough drawdown a risk limit would have had to absorb.
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