Why do the results of my bread-and-butter strategy 0DTE Breakeven Iron Condor vary so significantly throughout the year? How can it be that trades entered during the opening hours of the market at the beginning of the year were profitable, and the same trades during the last months of the year were barely making money? A trade log can help you understand.
SUMMARY: The article emphasizes the importance of keeping a trade log in options trading, particularly with strategies like 0DTE (zero days to expiration) options trading.
– Track performance: A trade log helps analyze the profitability of different strategies and trading times.
– Analyze trends: Logging trade details (entry time, strategy, premium collected, risk) allows for performance reviews and understanding trends across thousands of trades.
– Data-driven adjustments: The log helps adjust trading approaches based on time of day, market conditions, and long-term results.
– Memory fallacy: Human memory is unreliable for recalling trade outcomes, making a detailed log essential for objective analysis.
0DTE options trading
0DTE options trading has exploded in popularity over the last couple of years. In fact, 0DTE options – options contracts expiring the same day (zero days to expiration) – now constitute a significant portion of all options trading.
And there are hundreds of different strategies. You can buy calls or puts to bet on the direction, you can sell iron condors to bet on moves within a certain range, or buy iron condors to bet on a big move in either direction, or do broken butterflies, iron butterflies, or any other kind of strategy. Some strategies carry explosive risk – and the corresponding chance of huge profit or huge loss, other strategies depend on small daily gains – and the corresponding small drawdowns.
Keeping a trade log
I have tried a few of the strategies. And I have had solid wins and huge losses. Finally, I have ended up with the 0DTE Breakeven Iron Condor as my bread-and-butter strategy. It has served me well for more than three years with only three losing months so far.
However, this article is not about the 0DTE Breakeven Iron Condor strategy. Instead, it is about the importance of having a trade log to help analyzing your trades.
Trade log in Excel
I started logging my trades back in 2018 in an Excel sheet. For every trade, I log several details, such as the opening date, closing date, which strategy, collected premium/paid debit, adjustments, total risk (buying power), gross profit, net profit, and more.
For 0DTE trades, I also log which hour during the day the trade was opened.
I then use pivot tables to analyze the results of the different strategies.
The Excel sheet now contains almost ten thousand trades. This makes it possible for me to analyze the results of my different strategies. I also have built a custom GPT based on ChatGPT that I use for quicker analyses.
Today I cannot imagine doing 0DTE options trading without a good trade log.
Why do I log my trades
Why is that?
Because that is the only way I can systematically analyze the results of my trading.
Yes, I know that I can follow how my trading account develops. Does it go up or down? That part is easy. But for it to be useful information I also need to know why it goes up and down. With 0DTE most of us put on several trades every day. This can easily be more than 1000 trades in a year.
We tend to think we remember what went well and what did not. However, most of us will be surprised when we start analyzing the actual details of our trading.
A good trade log also helps in comparing the profitability of different strategies. You can analyze this in Excel, or by building a custom GPT for your log.
My 0DTE Breakeven Iron Condor example
And here is my analysis surprise:
My trade log gives two conclusions about my profit and loss depending on which hours the trades were opened:
– There is a significant difference in results depending on which hour the trade was entered during the day
– However, these differences are not stable over time. The results can be very different from one quarter to another.
For instance: Compare the two following graphs from my trade log. They give the results for the same strategy two quarters in a row. The results vary significantly.
What to learn from this?
Now, with so differing results for each quarter, is there any learning at all from this?
I think there is.
Here are my conclusions:
– Fight the recency bias! We all tend to put more weight into our recent results. However, these examples show that the recent experience may not be accurate for the long term.
– Keep logging! The longer you have data, the more trustable they are. My graphs are only for one year. But what if I log for 3-4 years more? My data will be more and more trustworthy.
– Remember that markets will change. The characteristics of the market are never stable. History does not tell all about what you can expect today.
How I will use these data
So how will I use these data? Will I change my trading style? Stop trading before lunch? Only trade during the last two hours? Because that would be the rational thing to do, right?
Here is my thinking:
– I will keep trading my 0DTE Breakeven Iron Condors throughout the day. This is important to keep collecting useful data on how the strategy performs over time.
– I will trade smaller and less frequently on less profitable hours and bigger and more often on profitable hours. That means that more of my trades, with the current results, will be at the end of the day.
– I will adjust quickly when I see the market change. For the time being my trades in the morning are not very profitable. But the very moment I see that change, I will put more risk into the morning hours.
– I will keep learning. This is not a one-size-fits-all exercise. And not a one-size-fits-at-all-times.
Back to the importance of keeping a trade log
But this all brings me back to my main point: We need to log our trades!
And we need to analyze them.
I do not care how you log your trades. I use an Excel sheet. You may use external services, such as Wingman. Or a more simplified sheet. Many retail traders have also created trade log templates you can download.
The most important is that we systematically log our trades and have a way to analyze them.
And, as a minimum, we need to log them by strategy, results, total risk, and, of course, time stamps.
The fallacy of memory
Because this is what we will discover: We cannot trust our own memory!
We need to gather our data over a long period of time. And we need to analyze them systematically. And learn from the results. Ideally also compare our own log with the results from backtesting, for instance through Option Omega.
[…] I have written before about how crucial it is to keep a trade log, especially in 0DTE options trading. A trade log makes it possible to analyze our trading results, for instance, by comparing the profitability of different strategies. […]
Hi John,
Thank you for sharing your approach, results and other useful information. I had considered creating my own AI model, but now see a path. Very exciting to consider.
I’m commenting on this post to ask if you would be willing to share an example of your log? While I’ve used spreadsheets to track my trades, it’s my preferred method, I mostly CSP, some spreads, and the occasional condor and butterfly. Inspired by a convergence of several sources, I’m currently exploring variants of the 0DTE iron condors on SPX and I’m curious to see what information you track after so many years of trading this strategy, particularly how manage logging the legs when you start splitting up the initial trade, either by closing one of the spreads, or the shorts, and reusing the longs. Thank you and kind regards. M
Hi Mark,
This is the information I track in my spreadsheet:
– Date of opening the trade
– Weekday of opening the trade
– Market hour for opening the trade (Dropdown with seven options: 09:30 – 10:00, 10:00 – 11:00, and then each hour until close)
– Ticker
– Type of trade (Iron Condor, Put Credit Spread, etc. )
– Category of trade (Daily, Weekly, Long-term)
– Trade strategy (Dropdown with the different strategies I follow + a category called Misc when I go outside my regular strategies)
– Price of underlying at the time of opening the trade (I mostly use this strategy on longer-term strategies)
– Number of contracts
– The trade itself (Example: “23SEP24 – 5745/5780/5680/5640”)
– Credit/debit per contract
– Total credit/debit (number of contracts multiplied by credit/debit per contract – this is calculated automatically)
– Then I have space for two adjustments (date, action and credit/debit) If I do more adjustments, I add a line. In these columns I also include stop losses and if trades are closed.
– Gross profit/loss – summing up the total credit/debit + the credit/debit from the adjustments
– Total risk in the trade
– “Stoploss risk” – max risk if all stop losses are hit (for instance on and IC, if the stop losses are hit on both sides). The total “stoploss risk” for the day should be maximum 2% of my account
– Close date
– These are what I fill out. Then I have calculations for net profit in numbers and percent as well as days in trade. I also add if the trade ended as profit or loss.
That is the basic setup of my Excel sheet. From this I use pivot tables to calculate the development of my different strategies.