What is a trading journal?
Think about it this way, you are an avid diary keeper. One day, you received a wedding invitation from your friend and she told you to bring it on her wedding day as it serves as a pass to the venue. But the wedding day is still 3 weeks ahead. As excited as you are, you wrote about it in your diary. Three weeks have passed and the wedding day comes. Here you are ready and prepped for the wedding, but you forgot where you put the wedding invitation! The good thing is that you have written in your diary where you kept it. So you see, a trading journal is like a diary. It is where you keep all records of every transaction, decision, and almost anything involved in your trades. It serves a lot of purpose. It can be used for future references, proof, study notes, or even just to brag about your accomplishments. But most importantly, it is used to assess your overall performance as a trader.
What should you record in your trading journal?
It doesn’t matter on what kind of notebook, pad, or recording application you use as your trading journal. Most traders, however, are more comfortable in using a spreadsheet as it makes it easier to track and compare data. There isn’t a standard on what to put in your journal. As long as it is relevant data about your trades, then you should put it. It would also be useful if you keep a screenshot of your trades, especially your entry and exit positions so you’ll understand and remember it better afterwards. We all know of athletes who spend a lot of time re-watching their previous matches in order to prepare for another. They do this to assess their flaws, their strengths and weaknesses, and what they still need to improve. A trading journal serves the same purpose. You can use it to tell whether your strategy is still working for your transactions, when and where you can still use it, and if there are any points to improve. As long as you only record accurate data, a trading journal can help you a lot in becoming a successful trader.
Why should you keep a trading journal?
One bad quality about some traders is their inability to control their emotions. A lot get carried away by their emotions too much, especially whenever they lose money from trades. Some end up not carrying on with their initial trading plan, others tend to trade again and again thinking that they should do everything to get back their lost profits, often resulting to greater loss. When people experience these kinds of things, they usually lose control and end up making irrational decisions. That’s where a trading journal comes to great use. After an emotional fit of trading, traders can assess their performance without the pressure of live trading. They usually experience those moments when they realize when and where they made a mistake. Learning from this, they are able to avoid those kinds of situations in the future.
Are you ready to start your journey in becoming a successful trader? Get up with your trading journals and start trading! Know what habits you should develop to become a successful trader. Read here about the 10 good online trading habits of a successful trader.
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