Today I would like to talk to you about keeping a trading journal. This might seem like a boring subject but trust me, it’s an important one.
There a many reason why you should keep track of your trades in a journal; some more obvious than others. I would like to discuss them with you.
Remember what you have done
This is the obvious one. Having a trace of what you have done helps you to understand the good and the bad in your trading. Did you overtrade? Did your winning/losing trades had something in common (timeframe, product, size, etc.)? It’s a powerful tool to analyse your performance because your memory alone is rarely good enough.
Help your mentor help you
If you have a mentor (which I highly recommend, just read the post “The importance of a mentor”), he will thank you for handing him a journal. It’s going to be easier for him to see what you are doing right and wrong and in the end, he’ll be able to give you more accurate feedback and useful tips.
Be accountable and self-aware
This is an effect that I did not expect when I started my journal. It’s like if putting my trade in a journal made it even more concrete, more real than a simple trade getting lost in a P/L that resets itself every day. I knew my mentor would see it, I knew I would see it every time I would open my journal so I started being more selective on my trades.
Now another question that is worth asking is, what do I put in my journal? You could easily put way too much information, get fed up and stop filling it. You could also put almost nothing in it and make it completely useless to you or your mentor. Here are the main elements I suggest you include for every trade:
- Date/Time you entered the trade
- Comments (technicals, fundamentals, confidence when entering, etc.)
It takes some good discipline to keep a trading journal. It also takes discipline to fill it honestly (especially in the comments when you know you entered a trade by FOMO or for no good reason). But if you want to take your trading to the next level, you should definitely add a journal to your trading toolbox.