This is our first attempt to guide new traders on proper learning techniques. Starting trading can be very intimidating and there are many pitfalls. Let us keep you on the right track.

What is strategy tracking?

Put simply, a strategy is a theory that you or any other trader can develop. Some people call it a setup. This theory requires testing to validate it's authenticity or validate it's failure.

A very common strategy is an ABCD strategy.

From the pattern above you can see that the pattern starts with a bull flag. After the pinnacle, traders take profits and drop the price action to a point where buyers are ok with fighting it out again. This is known as a support. The next step is to get confirmation of this support level. You can see that price rises and dips to C but does not test B again. This is the entry point for ABCD.

So how do you track strategy progress?

I like to think about strategy tracking along the lines of the scientific method. For those of you who forgot grade school science, here is a quick chart.

I will focus on the following topics here: Hypothesis, Experiment, Collect Data, Analysis, and finally Conclusion.

Hypothesis: Let's say that you hypothesis that the ABCD pattern seems to work on mid-cap stocks in the tech sector. This is a conclusion you made through research or word of mouth in your trading community.

Experiment: You decide that you will watch news and create a watch list for only tech sector stocks that are

The bullet points above are your criteria or rule sets for market conditions

You may also have entry triggers and exit triggers

These are the rules / criteria you are testing.

Collecting Data:

Once you have this set of criteria or rules you must TEST THEM! This means you trade this setup to the T and X amount of times.

This is also known as Sample Sets. Generally, the higher the number the better. You should try to take this trade setup at least 25 times so you can collect data. If you see that the strategy is not going to work way before that then just revise it or try a new strategy. You can also create a new version in Chartlog. Versioning is helpful when you think your strategy would work with different criteria.

Analysis:

This is where you look at your sample set and see how profitable it is. Is it 62% profitable? If it is, which criteria or rule resulted in the most losses? Create a new version and remove that criteria or change it and restart the experiment!

Ok Adrian, that was a nice intro, now how does Chartlog help me do this and make my life easier?

Let's do a walkthrough creating ABCD in Chartlog.

Step 1: Head over to strategies and click "New Strategy": https://app.chartlog.com/strategies

Step 2: Name it "ABCD"

Step 3: You will see that you are now in Draft status. Go ahead and click on Add Criteria

Step 4: Add whatever criteria you like, this is what I added
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Step 5: Add a description! You can even add images of chart patterns etc
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Step 6: Just click the big blue Create button on the top right.

That's it, that's all it takes to create a strategy. Now let's move on to Collecting Data

Now let's say I have been trading this setup for a week non-stop. I want to make sure I'm collecting this data in my journal. As a trader I would login to Chartlog daily and review each individual trade and assign a strategy

The key here is to actually select the strategy from the drop down and honestly check only the rules and criteria that you followed. If you select the boxes and really did not follow them then you are cheating yourself.

As you progress with your testing you can head over to the strategies section to view your progress
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If your strategy is failing, either abandon it or create a new version. Creating a new version starts a new sample set and you can edit your criteria.

Remember this feature is meant to help you collect data and analyze if a strategy is working for you! In the next months we will be making this feature even more robust and we will be testing automatic validation of rules to make it less cumbersome for you to use.