taking some pain

brett steenbarger has a post up talking about why he does his taxes by hand. i have done the same thing over the last couple of years, for the same reasons he describes.

My favorite form of performance review is also my most painful. Every year I complete my income taxes–by hand. That means that I write out every single trade that I placed during the year in chronological order, along with its profit/loss (P/L). This past year, that meant reviewing approximately 240 trades, roughly one a day.

Yes, there are ways of capturing this information electronically to avoid the hand-numbing task of writing each transaction, but I choose the old-fashioned method. Writing the trades out makes me reflect on them: “What the hell happened here?” and “What was going on in the market then?” Writing the trades makes me sensitive, not only to their P/L, but to their sequencing: How many runs of winners and losers did I have? How far did I draw down during the year? How well did I trade after I had a losing period? What happened following winning periods?

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