Why do traders use a trading journal?
If you are struggling to make money or lose money in the market continuously, you can definitely resolve the problem by keeping a trader’s journal. Professional traders will confirm this.
Why Is A Trading Journal Needed?
To Improve Your Progress
If you get into the habit of writing down the details of every trade you make in the journal, you will not only remember your emotions and feelings in a week or two, but will also be able to see your progress. This creates a positive tone for future trading.
Journals help traders turn one day’s trading experience into the trading experience of ten days. Mike Bellafiore wrote an excellent book called “One Good Trade” on the subject.
To Simplify Your Work
Successful performance in the future can be modeled if you understand the connection between the failures and successes of the past objectively. Intuition is based on experience. If you really want to learn and succeed in the financial markets, you should constantly record both your failures and your achievements.
Many traders scoff at the idea of keeping a record as they feel it’s a waste of time and they can remember everything. It is however more ridiculous to lose your deposit time and again, get angry, and quit when you’re halfway there.
It takes hard work to trade successfully and keeping a trader’s journal is a critical part of it that can simplify your work significantly. Along with a trading plan, money management and risk management, you are unlikely to succeed without it.
To Help Control Your Emotions and Finances
A trader’s journal should be started from the very first days of trading, as soon as a brokerage account has been opened. Follow the guidelines below to do it right:
- Note the entry rules and trading strategy that you will use, the number of trades you do per day and per month, the deal’s risk and the indicators used. Take screenshots of each transaction and add description to these.
- Before, during and after each trade, note your emotional state. Feelings of greed, fear, anger and excitement are extremely important. Make sure you write down everything you think and feel!
- Summarize the results on a weekly or monthly basis. Determine the number of unsuccessful and successful trades. Find out which assets were the most profitable and which ones lost. Check the expiration dates and timeframes that gave the best results. Filter misleading signals and analyze your screenshots.
This will give you a detailed and accurate picture of your trading process. You will be able to see the trades that were profitable and why, and this will help you repeat them.
The same goes for negative transactions. They will show you what to avoid doing, thus preventing you from making the same mistakes over and over.
To Help You Reach Your Goals
Writing your goals in your journal means you will see them each time you use your trading journal. This will help you remember why you’re doing this and why you may have stopped at some point along the way.
Keeping a journal will only be beneficial if you understand how it will benefit you and can really see its value from the very beginning. If you simply decide to start a journal because this article said it’s a good thing to do, but you don’t really see how it will help you, you may as well not bother starting one.
Only you can decide if you want to keep a journal or not and this will depend on your plans and goals, and how serious you are about them. If you decide not to keep a journal, you will likely end up with neither a loss nor a profit at best, or at worst, you will keep on making loses.
If you want to make progress along the path of professional trading, using a trading journal is the only way to go.