The two documents every student in this course keeps — the opening record filed in the first session, and the position log kept from then on.
Records#
Two documents. You fill the first one once and never change it. You add to the second one every time you do anything.
Both are assessed, and both are read back to you in later weeks, so write them for a reader who is not you.
The opening record#
Filed in the first session, before you open anything. Four questions. Answer them in the order they appear and do not revise them afterwards — a later revision destroys the only thing this document is for.
1. What are you buying, and how much of your account goes into it?
Name the instrument and give the position as a percentage of your account balance. If you are opening more than one position, list each with its percentage.
2. Why this one? One sentence.
Not a paragraph. One sentence, in your own words, in the form “I am buying it because ___”. Whatever you write here is what you actually knew at the time, which is the reason you are writing it before you buy rather than after.
3. How many positions do you hold, and what do they have in common?
If the answer to the second half is “nothing”, write “nothing”. If two of them sell the same thing, or serve the same customers, or rise and fall with the same input, say so.
4. What would make you close it?
A price, a date, a condition, or the word “nothing”. “Nothing” is an acceptable answer and a common one. It is not a wrong answer in week 1.
File it, and do not look at it again until you are asked to.
The position log#
One row per action, added on the day of the action. An action is opening, adding, reducing, closing, or a fee being charged. Not a thought — an action.
Every row carries:
| Field | What goes in it |
|---|---|
| Date | The day the action happened |
| Action | open / add / reduce / close / fee |
| Instrument | What it was |
| Units | How many |
| Price | The price you actually transacted at, not the last price you saw |
| Side of the quote | Whether you paid the ask or received the bid |
| Fee | In dollars, including anything the platform calls something else |
| Account after | Your balance once this action settled |
The fifth and sixth fields are the ones people leave out, and they are the ones week 2 is about. If you record “bought at $40” when the quote was $39.96 bid and $40.00 ask, you have thrown away the cost you paid to get in, and it is the only cost in this course you are guaranteed to pay.
The counterfactual column#
From week 4 onwards the log carries one more column, and it has to be filled in on the day of the action, not afterwards:
If I do nothing today, what happens?
Write the position you would still be holding and what it is worth right now. That is all. You are not predicting anything; you are recording the thing you chose against, at the moment you chose against it, at a price you can check.
Filled in on the day, this column is evidence. Filled in later, it is a story about yourself, and everyone tells themselves a flattering one. In week 12 you will be asked to total it.
Arithmetic#
Every number in an assessment has to be reproducible from numbers you also supply. “The position lost about a fifth of its value” is not a finding. This is:
open 250 @ $40.00 ask = $10,000.00
fee = $5.00
close 250 @ $39.96 bid = $9,990.00
fee = $5.00
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round trip = $20.00That round trip is 0.20% of $10,000. Four lines and a subtraction. Do that, every time, and the week 12 account writes itself.