Socratic Trade Reviews

Socratic Trade Review Key

Organization: The Socratic Trade Review (STR) is a method for reexamining a trade in the Socratic fashion of premise, premise, conclusion.  The first premise discusses the stock’s behavior prior to our entry point, the signal the stock was on according to the pivot methodology, the reason we entered the trade where and when we did, and how we selected a position size.  The second premise discusses what occurred once we were in the trade, where our stops were placed, and where we planned to exit the position if the trade moved in accordance with our thesis. In the conclusion section we discuss how the position played out and when and how we exited the position.  Finally, in the commentary section we discuss the overall lesson of the trade, what can be improved upon, and what allowed for us to be successful.  We use the STRs to bring clarity to our trading by reviewing both our best and worst trades with an objective mind, free from any emotional or financial investment.  At the end of the day we can view how successful our entry and exit points were based on where the stock moved after our position was closed out.  We examine one another’s trades and discuss the pros and cons of each, with an eye for expanding the skills of both our colleagues and ourselves.

Below is an example of an STR.  Each review begins on the right side of the page with the name of the trader who executed the trade and the day the trade was executed.  The leftside of the page indicates the ticker symbol of the stock and the type of chart that is shown below.  In this case the stock is Graftech, ticker symbol GTI, and the chart is a 1 Day, 5 minute chart.  Within the chart you can see RED E boxes, which represent short or sell orders that were executed as well as Blue E boxes representing buy or cover orders.  Further, there is one red line on each chart, which represents the price average of these sell/short orders and one blue line, which represents the price average of our buy/cover orders.  In this example, 200 shares of GTI were shorted at 12.59, directly above the red line and repurchased at a price average of 12.44.

Below the chart is a section titled FACTS, which lists the pertinent pivots for the trade.   In this case R4 and R3 were important levels, representedwith a green and a red arrow respectively.  Next is a list of Premise I, Premise II, Conclusion and Commentary on the trade.  STRs have a second chart at the bottom that is always a 1 month and shows the overall behavior of a stock each day.

Please open the PDF below in order to see a sample of our Socratic Trade Reviews.