Day Trading and Swing Trading Futures with Price Action: Risk Management Plan and Trade log. | Humberto Malaspina | Skillshare

Playback Speed


  • 0.5x
  • 1x (Normal)
  • 1.25x
  • 1.5x
  • 2x

Day Trading and Swing Trading Futures with Price Action: Risk Management Plan and Trade log.

teacher avatar Humberto Malaspina, Emini S&P 500 Trader.

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

8 Lessons (45m)
    • 1. Introduction: A good risk management plan, a trader´s lifesaver.

      2:30
    • 2. My all in one risk management plan plus trade log included (BONUS)!

      1:10
    • 3. Describing step by step my risk management plan.

      8:39
    • 4. Calculating position size based on present risk.

      6:29
    • 5. Outcome estimation using the trade calculator.

      10:14
    • 6. Use a trading log with revealing statistics.

      12:00
    • 7. Annual statistics, drawdowns and charts.

      3:15
    • 8. Words from Humberto.

      1:06
  • --
  • Beginner level
  • Intermediate level
  • Advanced level
  • All levels
  • Beg/Int level
  • Int/Adv level

Community Generated

The level is determined by a majority opinion of students who have reviewed this class. The teacher's recommendation is shown until at least 5 student responses are collected.

33

Students

--

Projects

About This Class

All in one: Risk management plan and trade log. Students will improve their risk management plan and will learn to use a trade Log with Microsoft Excel.

This class provides advanced information related to risk management. Students after completing this lecture will have a very solid understanding of the importance of these skills which are vital for surviving as a trader of the financial markets. 

In this class, students will download my all in one risk management plan which also includes a trade log. This is a bonus for taking this class. Students need to have Microsoft Excel installed on their computers in order to use it. Students will notice that this risk management plan is adapted for trading the Emini S&P 500 but they can make all the modifications needed for trading any other financial instrument. This risk management plan will be updated for download as soon as a new version is available.

During this class, I will explain step by step all the components of my risk management plan for students to use it or to modify it depending on their needs. At the end of this class, students will know the meaning of each component of this risk management plan so they will be able to understand all calculations related to proper trading size based on present risk later during this class.

The students will practice how to calculate position size. Students will learn that every trade is different and they need to properly size their trades based on present risk and available capital to ensure they stay for the long run in the trading business. Students will use the risk management available for download in this class.

I will explain to students how to estimate possible trade outcomes using the trade calculator that is included in the spreadsheet of the risk management plan.

During this class, students will learn how to use the trading log that is included in the Excel file of the Risk  Management Plan.

Students will take a closer look at annual statistics, drawdowns, and capital growth tabs located in the Excel file of the Risk Management Plan. All these three topics are the cornerstone for having an overall idea of your performance with a glance. 

Meet Your Teacher

Teacher Profile Image

Humberto Malaspina

Emini S&P 500 Trader.

Teacher

Hello, my name is Humberto.

Working in the oil exploration industry for many years made me see many ups and downs in this business. Oil prices are a Russian roulette, each time they fall to the red zone of production cost, companies fire employees left and right, leaving a lot of people suffering. As a witness of this situation, I always looked for additional sources of income, and I found one trading the Emini S&P 500. Nowadays, after a lot of work and dedication, I managed to understand price action (the language of the markets) and money management, both important skills to have for anyone interested in trading any financial instrument. In my case, I only trade the Emini S&P 500, nothing else, all my focus is on this particular futures. This has given me the opp... See full profile

Class Ratings

Expectations Met?
  • Exceeded!
    0%
  • Yes
    0%
  • Somewhat
    0%
  • Not really
    0%
Reviews Archive

In October 2018, we updated our review system to improve the way we collect feedback. Below are the reviews written before that update.

Why Join Skillshare?

Take award-winning Skillshare Original Classes

Each class has short lessons, hands-on projects

Your membership supports Skillshare teachers

Learn From Anywhere

Take classes on the go with the Skillshare app. Stream or download to watch on the plane, the subway, or wherever you learn best.

Transcripts

1. Introduction: A good risk management plan, a trader´s lifesaver.: A good risk and money management plan, a trader´s lifesaver. One of the difference between being a winning trader and a losing one is that those who follow a strict risk and money management plan will have a much better chance of coming out ahead of the game. If you do not know how to manage risk and your capital, there is little chance that you can make money as a trader, even if you are one of the luckiest traders in the world. You can have the greatest trading method but, unless you know how to manage risk and your money using a management plan you can end up a loser. You can start risking too much and as soon as a little bad streak hit you, your profits and then some, would disappear quickly, because you were trading more heavily than you should have been. In the other hand, you can have a regular trading method but if you have good risk and money management skills, you can still come out ahead. Without those skills, it is extremely hard to make it as a trader. People spend too much time looking at charts or making a system, but ignore risk and money management until is too late. They concentrate on indicators and totally ignore trading size when putting together a method, and trading size is one things that can make or break a trader. Learning to manage risk and your capital properly is a lot more difficult than learning how to read a chart, put on trades or set stop losses. What all successful traders have in common is that they all employ a strict risk and money management plan and agree that it is the secret to their success. The goal of a risk and money management plan is to allow a trader to still be around after having a bad trade or a series of losses. Learning how to control risk will help preserve trading capital which ensures that a trader will be around even if he has a normal losing streak. 2. My all in one risk management plan plus trade log included (BONUS)!: My all in one risk and money management plan. Trade log included! The goal of this lecture is to give you the opportunity to download my all in one risk and money management plan which also includes a trade log. This is a bonus for taking this course. The file is attached to this lecture as a downloadable resource. You need to have Microsoft Excel installed in your computer in order to use it. Please open the file after download and navigate through it. You will notice that this risk and money management plan is adapted for trading the Emini S&P 500 but you can make all the modifications needed for trading any other financial instrument. Review it and get used to it before continue with the next sections where I will explain how to use it and also you will have the chance to practice. Take your time and continue with the next section when you are ready. 3. Describing step by step my risk management plan.: DESCRIBING STEP BY STEP MY RISK AND MONEY MANAGEMENT PLAN. In this lecture I will explain step by step. all the components of my risk and money management plan for you to use it or to modify it depending on your needs. Please download the file called RMM PLAN.xlsx and open it, we will use it later during this lecture. You can pause this presentation as you need in order to take a closer look at this spreadsheet. Before we start, I want you to know that cells in white background color are for you to enter data for calculations. The cells that have yellow background color have formulas in them, feel free to modify these formulas as you see fit depending on the financial instrument you are trading. I will describe each cell in this risk and money management plan. Let´s begin. Once you open the file RMM PLAN.xlsx please click on the Risk and Money Management spreadsheet, here I will describe each cell. Remember, this is set up to trade the Emini S&P 500 but you can modify it as you wish. OK let's begin. Exchange rate "Your Local Currency" versus US$: Here you need to specify the current exchange rate of your local currency versus the US DOLLAR. This is used to show approximates of how much are your winning or losing based on your currency. This is just in case you need to know this information. Point value. This is how much is worth a full point move. A full point move in the E-mini S&P500 futures contract is worth $50. Of course, this will vary depending on the financial instrument you trade. Commission per side per contract: You will need to enter here your per side cost which is the transaction cost associated with one leg of a futures transaction. either the opening or the closing of a position. Per side costs are quoted on a per side per contract basis. If, for example, a broker quotes you $3.50 per side cost to trade an E-mini S&P500 contract then your round trip cost will be $7 to both open and close the position. Performance bond maintenance: Here you must enter the performance bond maintenance figure. This is the minimum equity that must be maintained for each contract in a customer's account subsequent to deposit of the initial performance bond. If the equity drops below this level, a deposit must be made to bring the account back to the initial performance bond level. Performance bond per contract: This is the minimum amount of funds that must be deposited as a performance bond by a customer with his broker, by a broker with a clearing member or by a clearing member with the Clearing House. This figure is calculated by Excel based on the performance bond maintenance level. Safety capital needed to play per contract. This is the figure I need to play a futures contract in order to have a safety net to face any streak of losing trades. This figure is calculated by Excel based on the performance bond value. Remember, being well capitalized is one of the golden rules for successful trading. Maximum capital risk percentage per trade: You will need to enter here the percentage of your total trading capital to put at risk in any given trade. My suggestion is not to risk more than 1.5% of your total trading capital in any given trade. The reason for this figure is that it lets you be wrong 20 times in a row before getting wiped out, this is very unlikely, but if it happens you will have the chance to make it back and continue trading for the long run. Initial capital for the month: You will enter here the total amount of capital available for trading in your account the beginning of each month. You need to update this number the first day of each month. This figure will be used for other calculations. Trading capital available for the day: You will enter here the total amount of trading capital in your account every day before the market open. You need to update this number daily. CUTOFF POINT FOR THE DAY. If you lose 3% or more of your trading capital available for the day you should stop trading to evaluate your trades, figure out what has happened. Take a rest. Wait for the next day to take any new trades. TOTAL CUTOFF POINT. if you lose 15% of more of your initial capital for the month, you must stop trading until you review your method, risk parameters and trading plan to find out why you are losing. Capital lost for the month: This is the capital lost for the month, it is calculated by excel. Total contracts allowed to trade (Not considering risk): This is the maximum number of contracts allowed to trade even if your trade risk is just a quarter of a point. This is calculated based on the capital available for the day and the safety capital needed to play per contract. Total capital at risk per trade: This is the total capital you will ever risk per trade considering your trading capital available for the day and your maximum capital risk percentage per trade. You will be able to risk less per trade because each trade is different but this number is the maximum amount of money you will ever risk based on your current capital and risk acceptance. Entry price: Here you will enter the entry price of your trade for any financial instrument you are using. Stop loss after entry: Here you will specify your stop loss price level for the present trade. Actual trade risk points These will be the risk points for the present trade based on the entry and stop loss prices. Maximum number of contracts to trade considering risk: This number represents the maximum number of contracts that you can trade considering the actual risk of your trade. Total capital at risk based on parameters: This is the total capital at risk for the present trade based on the risk parameters. Safety capital needed to make this trade: This is the total safety capital needed to make the present trade. Margin call: This is the price level where a margin call is due If your equity reaches below this number. FIND PRICE LIMITS HERE FOR E-mini S&P 500 Futures. In case you trade the E-mini S&P 500 futures contract or any other futures, these numbers are very important to know. Please click on the link of the cell A23 and it will take you to CME website where the high and low limits for this contract are specified. Please copy and paste these numbers in their respective cells for high and low limits. You can modify this link as you wish depending on the instrument you trade. You must update this information daily before the market open. Review this risk and money management plan and get used to it before continue, you will use it later in this course. Take your time and move on when you are ready. 4. Calculating position size based on present risk.: CALCULATING POSITION SIZE BASED ON PRESENT RISK AND CAPITAL. Before we begin with this lecture there are two important tips I would like to share in order to reduce your risk exposure to improve the probabilities of becoming a successful trader in any market. I will keep this short and very easy to understand. The goal of this lecture is for you to practice calculating position size. Always remember that every trade is different and you need to properly size your trade based on present risk and available capital. This is the right way to do it in order to ensure you stay for the long run in the trading business. Tip 1. MAKE SURE YOU ARE PROPERLY CAPITALIZED. Traders with insufficient funds make it hard to succeed because it is very difficult to set good risk parameters when you do not have enough money. The fact that you have capital to put on a trade does not mean that you are capitalized enough to do it. Undercapitalized traders risk more than they should and it takes only a few mistakes to wipe them out. Once you know the total amount of money you have for trading, find out the product specifications you wish to trade in order to determine if you are properly capitalized. A trader with US$ 25.000 may trade four contracts of Crude Oil Futures but with the same amount can only trade two lots of the Emini S&P 500. It is important that you find out what you can afford to trade before putting on any orders. ALWAYS ASSESS RISK FIRST. Before making a trade you have to measure risk first, then you can verify if the trade is worth making and if so, how many contracts, lots or shares you can put on. Always think how much you can lose before how much you can win. Trading larger than you should and exposing yourself to bigger risk than you capital can handle surely will end your trading career very, very fast. Please remember these two tips during your trading career, they are the foundation of risk reduction. Let´s see an example Now, during this practice we will play with different scenarios for you to understand the importance of being well capitalized and risk assessment. This will show you how these two factors are crucial components of your day trading endeavor. As you modify the values you will notice how the remaining parameters will change and at the end you will have the position size you should take based on the present risk profile and available capital. OK here at point value on performance on maintenance you can adjust the quantities. Remember point value and performance bond are key components or risk assessment. These are variables you need to study closely in order to choose what to trade based on your trading capital. Also you can change the maximum capital risk % per trade, the initial capital for the month and for the day. Remember the more capital you have the less risk you will need to put on trades. Choose the product to trade wisely. Try to keep maximum risk at or under 2 %. Now you can change your entry price and your stop loss after entry. This will define your risk. Now with the present risk you will size your position accordingly. At the end, considering all the factors, the product you are trading, the maximum risk you are willing to take, the capital available for trading and your risk profile based on the present trade, You will know the position side you should take, and this is a golden, a golden rule, you can not break, if you do, you are exposing yourself to a bigger risk than your capital can handle, and surely it will wipe out your account in a few bad trades. In order to manage risk properly, you need to make sure to trade what you can afford and are able to handle a losing streak. The most important advice I can give you to survive a losing streak is not to risk more than 2 percent of your total capital on any trade. The less you risk the better, for this you will need to have more capital. Always remember, this advice applies for any product you want to trade. The second most important advice is that you stick to your plan, without discipline, no trader will succeed. So, always stay focused to follow your plan. One final warning. 90 % of the people lose money trading the markets and it is because they are not well capitalized, do not manage risk properly, and lack the discipline to follow a trading plan with positive expectancy. This is the reason. Look no further. Again review this risk and money management plan and get used to it. This is the real holy grail of trading, take your time and move on when you're ready. 5. Outcome estimation using the trade calculator.: OUTCOME ESTIMATION USING THE TRADE CALCULATOR. The objective of this lecture is to explain how to estimate possible trade outcomes using the trade calculator that is included in the spreadsheet of the risk and money management plan. You will need the Microsoft Excel file of the risk and money management plan available for download in this section to use it during this lecture. The importance of using a trade calculator is that it makes things easier for you when evaluating different trading ideas for developing or enhancing your trading method or system. My trading method is based on price action. I analyze price patterns to make trading decisions. These price patterns tend to repeat itself over time and this statistical edge gives me an advantage to keep most of the money made by playing the markets. In order to learn about price patterns and to test the potential profitability of a trading idea I use after the fact charts to save time when analyzing price action patterns. The trading ideas that come out of this analysis are tested later in real time trading. When analyzing price action patterns You need to figure out how to trade it and how much money you will make during that specific situation. Although all trades are different this give you a general idea of the potential profitability of those trades and this is when a trade calculator comes in handy. Now we will take a look at an E-mini S&P 500 chart to find a trading idea, select entry and exit price zones based on price action and finally enter this information into the calculator to find out the potential gain or loss. Please note that we will learn more about price action later during this course. Beware, after the fact charts are only for educational use for the purpose of this course. They help us to program our minds to learn about profitable price action patterns and how to find them, but only real time trading with money at risk will test our psychological capabilities and skills to trade the financial markets. First thing we notice looking at the yesterday chart is that the price is trending up. So we expect to trade from the long side unless price action changes the trend to the downside during the day. At 9:50 we detected a double bottom chart pattern forming an area of support. As we saw price continuation at candle (1) we placed our bet of 8 lots at 2566.5 with a stop loss at 2562.75 risking 3.75 points with an initial profit potential of 6 points. We bought weakness to open our position. The price went our way and broke resistance at 2568 and continue upward to form resistance around 2572 area, then the price made a small pullback to resume its upward momentum to hit resistance where we sold 1 lot at 2572 inside candle (2). We sold strength. Now we have 7 lots remaining in our hands. The idea is to scale out our whole position while discovering price action. The price keeps moving up and as soon as resistance at 2572 is broken and price holds above this area at candle (3) we moved our stop loss with the remaining 7 lots at 2568 area. This will protect our partial profits. Price continues up to form a resistance level at 2577 then it makes a small pullback to attack again 2577 where we sold 1 lot at strength during candle (4) at an index price of 2576. Now we have 6 lots remaining. Again the price continues upward forming a new resistance level around 2579, then it makes a small pull back to charge back up toward resistance at 2579 where we sold 1 lot at 2578.25 We sold strength again. Now we have 5 lots remaining. Notice how we are scaling out the position as we discover price action. You always need to wait for the market to talk to you and then act based on the facts, never try to forecast the market, it is a losing proposition. As soon as candle (5) closed we moved our stop loss with the remaining 5 lots at 2574.75 area where there is a clear support level. Suddenly price shows signs of weakness breaking support level at 2577 and then comes back up again, this a subtle signal that the uptrend might be about to end. We will sell our remaining position at the next signal of price weakness. The price comes back up again in a burst breaking with force resistance at 2579 to reach a new high of 2580.75 then the price falls back down as a rock breaking the new support at 2579 with the same force as it came back up. This is another sign of weakness and we sold our remaining 5 lots at 2578 to close our position. As you can see scaling out of a position is a way of taking partial profits while discovering price action reducing uncertainty, this also allows you to carry on the remaining position to profit from the rest of the trend in case it continues. Now that we have collected all price information about our entry and exits lets input this data into the trade calculator. Please open the Excel spreadsheet file RMM PLAN.XLSX and click on the RISK & MONEY MANAGEMENT tab In the column A, look down for an empty cell that is below the cell that says “PLAY (PLEASE ENTER L=Long OR S=Short)” Here you need to enter the letter L if the trade is a long play or the letter S if it is a short bet. Now we are going to input the quantity of contracts we bought. In the column B look for the cell that says “# Contracts”, next to the cell A that says “(PLEASE ENTER L=Long OR S=Short)”. Below this cell enter the number 8. In the column C look for the cell that says “Value” next to the cell B that says “# Contracts”. Below this cell enter the number 2566.50 which is the index price we paid for the 8 contracts. Note here that if you need to scale in an entry with different prices per contract you can do it specifying each quantity of contracts below cell B that says “# Contracts" and its corresponding index price below cell C that says “Value”. The spreadsheet will calculate the average price for all the contracts you are scaling in. Now we are going to input the index price for each contract that we sold scaling out. In the column G look for the cell that says “# Contracts”, next to the cell F that says “Average Price”. Below this cell enter the quantity of contracts that we sold with different price per individual cell and next to each one its corresponding index price below the cell that says “Value” in column H. In the column. "I" look for the cell that says “Gain/Loss”, below it you will find the gain or loss for each contract. Next to it at column "J" you will find the sub total for gain or loss, then at column "K" you will have the commissions paid to the broker and finally at column "L" you will see the total gain or loss for the trade after commissions. This is how the trade calculator works, please play with the numbers in this trade calculator to get used to it, this is a useful tool for estimating the profitability of your trading ideas based on price action patter recognition. Remember that cells in yellow color contain formulas. Feel free to adjust these formulas if needed it. Please, review this trade calculator and get used to it as well as you did with the risk and money management plan. Both tools combined work wonders. Take your time and move on when you are ready. 6. Use a trading log with revealing statistics.: Use a trade log with revealing statistics. I would like to address the importance of this topic in a few words. A trader who keeps a log can learn from his mistakes and also make a habit of the good decisions. It is amazing the power of a trading diary. It will provide you a view of your past actions which has a lot of value and feedback. It is without a doubt the best learning tool available to traders. Please do yourself a HUGE favor and keep an updated journal of all your trades. During this lecture I will teach you how to use the trading log that is included in the Excel file of the Risk and Money Management Plan that is available for download in this section. Please open it as we will dive in right away. Before we begin I want you to remember that the cells in white background color are for you to enter information, the ones in yellow background color contain formulas. Once you open the Excel file of the Risk and Money Management Plan, please click on the tab called “Method Log". This spreadsheet contains the trade journal that I use to test the expectancy of my trading strategy. Here you will enter data to make calculations that will determine if your method is profitable or not. Please note there are other tabs for monthly journals called January Trade Log, February Trade Log and so for until December Trade log. These spreadsheets are used to make a diary of your trades by month and contain the same calculations as the Method Log tab. The idea is to register the trades for each month so you can have a journal of your trading year for a complete statistical view of your trading strategy. There are also other tabs as; Annual Drawdown, Annual Statistics and Annual Capital Growth that I will explain later during the next lectures. All these spreadsheets are linked so information in one spreadsheet is used in others. You will notice it as soon as you register information of your trades. For now let´s focus on the Method Log tab. Please click on it. At column B you will enter data related to the date of your trade in the format (DD/MM/YYYY). If you want you can change this date format to the one you like best. At column C, enter in these cells only the time of your first entry for each trade, independently if you scaled in multiple contracts at different prices for the same trade. Only the time of the first entry for every particular trade is needed. At column D, you must specify here the reasons why you took the trade. It is very important to describe the market environment as this will create a mental map or habit and will make you act with more conviction in similar market situations with a positive outcome and will be more cautions if a loss occurred in a similar trade. At column E, insert here a link to a chart of your trade. Having a graphical record will help to keep in your mind the successful price patters that made you profits and also the ones where you incurred in a loss. This habit of keeping a journal of all this information will teach your subconscious mind how to react in certain conditions and how to make profits from them. At column F, you need to enter here the number of risk points you took on a specific trade. In time you will learn how you are increasing or reducing risk depending on each price pattern. At column G, here you will specify the numbers of contracts you traded. At column H, you will enter the total commissions paid for this trade. At column I you need to indicate the outcome amount for this trade. At column J, just below “Initial Capital”, in the cell with white color background, please specify the total amount of money you have for trading during the current month. You must enter this data in order to calculate the Drawdown. From “column J” to “column V” there are cells with formulas that will be auto calculated as you enter data in the previous cells for making estimations that will be used later in the expectancy summary section. Here we can find important variables as drawdown, sum of consecutive winners and losers. There is a comment describing each column. At column W, you will find your total month outcome. This will be your total gain or loss for the month including commissions. At column X and Y, there is the EXCHANGE RATE (US$ x Your Currency) and the TOTAL MONTH (Gain or Loss in your currency). You can change the total month in your currency formula depending on the exchange rate for your location. At column X and Y, you will see the EXPECTANCY SUMMARY report. This section has different statistical variables of importance to determine if your method has a positive expectancy, a vital requirement to ensure your survival and success as a trader. You need a method that provides safe and steady returns. Based on this premise you need to understand these variables in the expectancy summary to determine if your method has these characteristics. The key is to find a balance among all these variables in order to decide if your method is worth the risk. Total month net profit: You need a trading method that has net profit and not a loss, but it is also important to know how many trades it made, how big the swings were, how large a drawdown there was, what the average trade made and so on. TOTAL MONTH NET PROFIT US$ less largest winner: Taking away the largest winner from the total net profit will let you see if the method is steady and profitable. Please pay close attention to this number. Total trades: A method to be statistically valid in my opinion must have a record of 50 trades or more, but in choosing between two methods that have similar results, stick to the one that has lower number of trades in the same period. This will reduce the damage done by slippage and commissions. Percentage of winning trades: Please pay close attention. it does not matter if a trading method is right 30%, 40% or 60% of the time. What it is important is how big the average loser is compared to the average winner. If you have good risk management skills, even a method with a 30 percent win/loss ratio can be quite robust. Largest winner versus largest loser: An important factor for your method to be profitable is that your largest and average losers are not bigger than your largest and average winners. The key point here is that your average winner is bigger than your average loser. Profit factor: this number will tell you the amount that will be made for every dollar that is lost. If the profit factor is 1 you are breaking even. To be on the safe side always aim to have a profit factor of more than 2. Expectancy per trade (Average Trade): This is one of the most important numbers to look at as it will tell a close truth about the profitability of your trading method. The average trade measures how the system does on a per-trade basis. This is the number that tells you how much on average you will make or lose every time you trade with your method. Consecutive Losers: If your expectancy per trade is good and by knowing how many losers in a row your method has had you can decide to increase your trading capital to face losing streaks. In this expectancy summary. You will find maximum consecutive winners and losers with their respective total amounts for you to take an informed decision. Also with this data you can stay confident of your system while going through bad weather. How volatile is your trading method? You want steady monthly performance. A system with positive return day after day with little variance from the mean is what we are looking for in a trading method. If the standard deviation is too wide, your method might not be safe as drawdowns could be large. If too many trades falls more than 2 standards deviations outside the mean on the losing side, please be careful about using your method. Adjust your method for having smaller equity swings, as it is more reliable. Please use the standard deviation data found in this expectancy summary to determine your method volatility. Commissions: When designing a system make sure it will cover the trading cost or else it can become a losing method. Look to make as few trades as possible always selecting the best set ups. This take patience but it will make a huge plus for your trading method. It is known that if cost is not considered carefully in a method with a lot of trades it makes it hard to be In this expectancy summary always pay close attention to your total trades and commissions paid, make your best effort to reduce these numbers as much as possible. Make a habit of updating your trading log and you will discover the power behind it. It will make you a better trader every day. You will learn a lot from it. Take your time and move on when you are ready. 7. Annual statistics, drawdowns and charts.: ANNUAL STATISTICS, DRAWDOWNS AND CAPITAL GROWTH CHART. In this lecture we will take a closer look at annual statistics, drawdowns and capital growth tabs located in the Excel file of the Risk and Money Management Plan that is available for download in this section. Please open it as we will begin right away. Please click on the ANNUAL STATISTICS tab. In this spreadsheet We don't have to enter any information, it is linked to the others spreadsheets on this file. It gathers data from them to make calculations in here. Please, begin populating the monthly trade logs with the outcomes of your trades. All will be reflected in these annual spreadsheets. As you can see, there is nothing new here, we have already covered these concepts. It is easy to understand. This is just an average of all the expectancy summaries registered during the year for you to have a statistical review of your overall performance. As we learned in the previous lectures all these numbers are important to measure the expectancy of your method but once you type in your logs ("your trade outcomes") pay close attention here to Largest and Average Loser and Maximum Drawdown. You need to have enough capital to survive these numbers if they happen again. In my opinion, this is the most important information in this spreadsheet for you to acknowledge. Let´s click on the Annual Drawdown tap. In this spreadsheet we have an annual review of your monthly drawdowns, including the maximum drawdown for the year, which is also in the annual statistics tab. The idea of having this information if for you to try during the next year to reduce each monthly drawdown. Make that, one of your trading goals. As you achieve it you will notice how your profits will increase. Remember, take care of your risk and profits will take care of themselves. Now, Let´s click on the Annual Capital Growth tab. Here we have a monthly table of the capital available for trading. You will notice in this table that your capital increases or decreases depending on your trading performance. Also we have a line chart of annual capital growth for you to have a visual representation of its development during the year. This spreadsheet is linked to each month trade log tab. These three tabs are the cornerstone for having an overall idea of your performance with a glance. Please keep a good track of them, if you do, it will be easier for you to detect any problems quickly. You have come a long way, we are near the end of this section. Go for a walk and come back when your mind is rested. 8. Words from Humberto.: hi after finishing this part of the course my first suggestion if you haven't done it already is to download my spreadsheet that contains the risk control model in this spreadsheet you will find all the necessary metrics to track your trading model it is important you keep track of the model because it will measure how effective it is also in the spreadsheet you will find your trading log it's very important that you keep track of all the trades winners and losers because it's the best way to learn one of the best ways to learn is to learn from your own mistakes you have to make a habit of keeping track of all your trades every day or once you have finished the trade you have to record in your trading log keeping records is part of your development as a trader so keep using the trading log and keep recording all the trades in time you will see the importance of these steps.