Execute Flawlessly

The Trading Process - Execute Flawlessly - Step 14

As traders, we all make mistakes.  We buy instead of sell.  We forget to turn automation on or off.  We don't have backup internet or computer access.  We forget about positions in our account.

The point is that mistakes are part of the business.

One way to get "incentive" to correcting mistakes is to record them, and record the amount of dollars involved. You can easily do this with a spreadsheet.  Just compare your actual fills to your "perfect" fills - the fills you should have obtained if you had executed flawlessly.

You can also use this spreadsheet to account for slippage in stop and market orders.  Many unscrupulous people out there show results without slippage - they obviously aren't trading!

I recently looked at my actual fills versus what Tradestation performance reports said.  I had assumed $35 for commissions and slippage per trade.  When I analyzed my real money results - which include some late trades, mistakes and of course normal bid/ask slippage - I found that my actual commissions and slippage was about $30 per round trip trade.  So, I am doing better than I had expected, and that is great to know.

Sometimes mistakes will work in your favor, and sometimes (most times) they will cost you money.

The key though, is that you can only correct what you know about.  Keeping a record of mistakes is the first step on the road to getting rid of them.

Next: Review and Monitor