WHAT IS A TRADING JOURNAL?

You may keep track of your deals in a trading journal. You should keep a trading notebook much like traders do to think back on past deals and assess your own performance. Journals can help you assess where you can make trading improvements. They are a practical method of maintaining records.

WHAT MAKES TRADING JOURNALS USEFUL

Main justifications for maintaining a trade notebook include:

They assist you in identifying your style's strengths and weaknesses.

Journals may improve the consistency of your trading.

The journal could help you stay responsible.

You can pick your ideal trading technique with the aid of the diary.

A simple yet incredibly powerful technique to enhance a trading plan is to keep a notebook. A trading plan is a set of principles you will adhere to, including trader psychology, risk management, and strategy.

STEPPES FOR MAKING A TRADING JOURNAL

It's easy to create a trading notebook, and you may customize it to fit your unique trading objectives and trading style. A general outline of what to do is provided below, followed by further details:

A spreadsheet or a book is your choice. We advise use a spreadsheet.

Decide what details you want to write down. (Trade date, underlying asset, size of stake, etc.)

As soon as you have completed setting your stop losses and take gains, record your trades.

After a predetermined amount of time (daily, monthly, or weekly), assemble the data and consider the transactions.

Select a book or spreadsheet in step one.

We advise utilizing a spreadsheet due to its integrated analytical features. These might assist you in considering the trades as we discuss in step

Step 2: Select the data to be recorded

A trade notebook will often follow the following structure:

A straightforward trade journal would follow the typical format. It can aid in your reflection on your transactions, but with a few additional criteria, we can improve the diary and make it far more informative.

Useful details to think about include are:

Reason for trade: The motive may be from technical, fundamental, or a mix of the two analyses. Once you've completed a number of transactions, you may evaluate this data to see whether your trading goals are yielding noticeable outcomes. This might also assist you in deciding whether technical analysis or fundamental analysis is the right approach for you.

Conviction: Conviction is your attitude toward the industry. We can classify the conviction as “strong” if you are basing your trade on a technical pattern and the pattern “checks off” a number of requirements. However, depending on the variables upon which the trade is based, the conviction may be “medium” or “low” if the pattern or fundamental narrative isn't truly clear. You may determine how many profitable deals you have made with each level of conviction by recording your conviction. This might assist you in deciding whether or not you should only trade when you are absolutely certain.

Other: You are free to write in your journal whatever you believe is appropriate. When arranging trades, some traders include a condition for their emotional state.

Step 3: Immediately after the trade, record the deals.

Make it a practice to write down the specifics of each deal as soon as possible after it occurs, while the information is still fresh. You won't have to think back on why you accepted the transaction if you do it this way. Make careful to only do this after setting your take-profit and stop-loss levels.

Step 4: Gather the information and evaluate the deals

You may assemble the data in your trading diary after a specific length of time, preferably a few months so you have adequate data.

Add up the number of profitable transactions you made while your conviction was high, medium, and low if you have a conviction criterion in your diary. You can decide after you get this information.

For instance, if you had a high level of confidence throughout 10 transactions and eight of them were profitable (take-profit targets were reached), your past trades would indicate an 80% chance of success. If just two of your ten transactions were profitable, that represents a 20% chance of success if your confidence was low on the other ten. You would thus get the conclusion that trading is only worthwhile when your conviction is great.

This may be done using a variety of criteria so that you can evaluate your trade and make improvements.

TEMPLATE FOR A TRADING JOURNAL

Here is an illustration of a template for a trading diary that uses the type of trading strategy employed as a criterion.

Following our discussion of the many criteria you may use in your journal, the table above shows how you might arrange all of this data in a spreadsheet.

TRADER JOURNALS: A REVIEW

One of the first things traders should do when starting to trade is start a trading log. A notebook is crucial for evaluating various trading plans and discovering which ones are most effective for specific traders.

In order to determine if a current trading strategy is effective, keeping a trading record is crucial. To sum it up:

You may record your trading activities in trade journals.

They aid traders in testing various trading techniques and tactics.

Trading journals can also help traders pinpoint strengths and weaknesses in a trading style.

To add to your knowledge see the Number One Mistake Traders Make where we analyzed thousands of live trades and came to a striking conclusion.