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What Gets Measured Gets Improved

What Gets Measured Gets Improved

by The MoleJanuary 25, 2023

My wife grew up in Paris and spent a few years modeling back in the late 1990s. One of her gigs took her to Tokyo and she really loved the energy of the place. The other day she said to me: “Once the Japanese figure out how to make French food, we are screwed.”

If you’re not familiar with the Japanese, they are a culture hell bent on perfection. What helped them rise out of a reputation of shitty quality in the 1950s, similar to the one the Chinese currently suffer from, is the Japanese principle of Kaizen. Let me explain.

If you play guitar, you are probably familiar with Eddie Van Halen’s signature guitar, the Wolfgang. It’s his guitar he’s been playing for essentially the last 30 years.

Aside from coming in different finishes and the addition of the red kill switch on the guitar, it’s essentially unchanged from its original incarnation he played almost 30 years ago.

This guitar is one of Eddie’s masterpieces and more than 20 years later, they are still extremely popular. Once you pick one of these guitars up, it’s like being addicted to crack – it’s impossible to put it down.

They are set up for shredding and they seem to stay in tune for hours, no matter how much abuse they receive.

These guitars were initially made by Ernie Ball. But Ernie Ball couldn’t keep up with the demand.

Then Peavy took over the production for almost 15 years and around 2015, Fender took the reins and now makes the Wolfgang.

Over the life of the Wolfgang, they’ve been made in Korea, Mexico, Japan and the USA. Guess which ones are the most desired guitars to own?

It is of course the Japanese made Wolfgangs. Not shocking. Sorry to bruise the ego of the USA.

Why? Because the Japanese are bloody perfectionists, they even put us Germans to shame. It all started with the principle of Kaizen and it’s quite simple: continuous improvement.

The most recently made Japanese Wolfgang is probably better than the first Wolfgang they made, because they are always improving. That’s their culture. They are in-it-to-win-it and constantly thinking: how can I improve?

A simple concept from Kaizen is: what gets measured gets improved. If you are not logging your trades and parameters around them, it is near impossible to review your trading results and see where you can improve.

Let me give you a simple example.

When I reached the 1000 trade benchmark with my VWAP Warrior trading system, I started looking at the log of my first 1000 trades. I segregated the trades into 3 different time groups, based on the entry time of the trade:

Pre 10:15 AM – .03R average
10:15 AM – 12:15 PM – .24R average
12:15 PM – close – .10R average

The average expectancy was also consistently improving. In my first 250 campaigns of trading the system, the average expectancy was .07R.

In the most recent 250 trades, it was .27R. However you don’t need to be a Harvard data scientist to realize that I should focus my energy on the 10:15AM – 12:15PM time frame and forget the rest. And that’s exactly what I’ve done.

The upside is I have a lot more of my day back. Over time, with more data, I’ve shrunk that window down to an even smaller time frame. I spend an hour a day max trading the VWAP Warrior because of continuous improvement.

Not only has my expectancy increased, but I now have a lot more time on my hand I can spend on other endeavors.

And all that simply because I log my trading results.

Moral of the story: Logging your trading results if you want to improve is not optional, it’s an essential aspect of becoming a successful trader.

It’s the dawn of a new era for individual investors, so don’t waste time and get left behind. And trust that my team and I stand ready to help you kick your option trading skills to the next level.

With RPQ Unlimited, you’ll receive all the trading education you will ever need to be a successful options trader on a long term basis.

We believe it is crucial to immediately start growing your trading account just like a professional: slowly and consistently.

Which is why we’ll be spoon feeding you live quant trades that you’ll place alongside us. Trades from proven market specific strategies, with a proven track record that institutional firms keep under lock and key.

A LIVE cumulative P&L with all trades over the past year can be found here.

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See you on the other side.

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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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