Trading Coach Lessons - Don't Forget The Paperwork
One of the lessons my trading coach taught me right from the beginning is the need for paying attention to detail
. It is sometimes the littlest details that can cause the biggest headaches later on. One area that many traders find easy to overlook or put off is the proper recording of their trading activities. It is easy to understand - it can be uninteresting and monotonous but at the same time it is essential.There are several reasons why completing the paperwork and recording your trades completely is important. Firstly if are defined as a trader, then will need all of your trades documented completely and expenses recorded to prepare an accurate tax return. As each country has a different set of rules to classify traders versus investors, it is important to know at all times how your activity is viewed by the tax office.
Recording you trades is easy to delay and avoid but it is essential to track you performance. Trading performance should be tracked on a monthly, quarterly and yearly basis. It allows you to track how well your trading business is performing. It will give you the information on your system probabilities and allow you to compare the performance to previous periods. Some people may actually find it uncomfortable to track their performance so closely and prefer not to know the truth of how well or not their trading is performing.
It might be boring, but record keeping must be completed. There are ways to make it less of a burden. You could use a standard spreadsheet like Excel, but there are more specialized programs built just to assist you in recording your trading activities. They allow you to record your trades, update them and export the details if required.
If you are a short term trader, you will be completing a higher volume of trades and so it is even more important to record the trades as they happen. One last tip is to make sure you have a data backup plan - you need to make sure your data is safe.
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