The Ultimate guide to Journaling with Chartlog
Now, let’s get into the Strategies feature! The goal here is to define your own personal strategies, assign them to your trades, track their success rate, analyze your mistakes, and ultimately become a consistently profitable trader.
Let’s create our example strategy together and call it “1minORB” (short for “1min Opening Range Breakout”).
Next, we need to define the rules for our new strategy. There are three types of rules we’ll create:
The idea behind the 1minORB strategy is this: For a stock in play with a news catalyst, we wait for the first 1min candle at the market open to close, in other words, we wait until at least 9:31:00. If the candle shows strong momentum, we enter the trade when price breaks above/below the candle’s body and ride the momentum. This is a very simple, quick scalping strategy, so we need to take profit fast and exit as soon as the momentum stalls. Now, let’s define our rules in Chartlog!
Under market conditions we put four requirements:
We want to trade stocks in play that move as independently from the market as possible. To simplify the selection process, we stick to stocks with fresh news catalysts (1). We need the first 1min candle to showcase clear directionality and momentum such as hammer candles and big body candles. We don’t want large wicks in both directions as they would indicate indecision (2). VWAP (Volume weighted average price) is basically the average price of all shares traded during the day. It often acts as support/resistance, so we don’t want it to be above the price for long trades or below the price for short trades (3). Additionally, VWAP also tends to act as a magnet when price is extended, slowing down strong momentum moves. Therefore, we also don’t want VWAP to be too far from price (4).
Our entry trigger is simple: When price breaks the first 1min candle, we enter. For this example, we want to enter as soon as the candle’s body breaks, we don’t care about possible wicks.
Now, when do we exit the trade? That depends on whether it is a winning trade or a losing trade. If we go long and suddenly price drops below VWAP, we want to get out. Create the exit trigger “Loss of VWAP” and under settings choose Show rule only when: trade is a loser. And when do we exit our winning trades? As mentioned above, we need to get out as soon as the momentum stalls. But is that a measurable and objective exit rule? Not really, so we need to come up with clear criteria for that. To keep it as simple as possible, let’s just partial out (close part of our position) as soon as the market pops in our direction and get out of the trade entirely when we see a new 1min high/low against us. Create the rule “New 1min high/low” and set it as a rule only to be shown if the trade is a winner. Click on Create Strategy.
Congratulations, you just created your first trading strategy inside of Chartlog! For your own setups feel free to come up with more sophisticated rules and sort them into Rule Groups, but make sure you don’t overcomplicate things as that is one of the traps that new traders fall into.
After you created 1minORB, you’ll see an overview showing data about the strategy. For now, it's empty as we haven’t assigned any trades to the strategy, yet. You can come back here later to check the stats and how well you followed the rules.
Market conditions change over time and strategies might work better or worse at different times That’s why it’s useful to track data about each strategy in sample sets, so you can react quickly when things change. According to Mark Douglas, one of the most renowned trading coaches, 20-25 is a good sample set size. Go to Sample Sets and start a new one with 25 trades. Click on Start sample set and we are ready to assign strategies to our trades.