Every trader wants to know the secret to success. And every successful trader knows there is no secret: trading is about having a plan and knowing what tools you need to execute it.
A trading journal is a powerful tool meant to help you become a stronger trader. Essentially, it is a written record of what happened during a trade. You may include market conditions, the size of the trade, expiration time, prices, whether or not you were successful, and even notes on your emotions. What’s important is customizing your journal entries to fit your personal trading style.
At first glance, keeping a journal may seem tedious and time-consuming. Nonetheless, recording your trades teaches consistency and discipline, both of which can pay off in the long run. Let’s delve deeper into the ways a trading journal can be useful.
You learn to identify trends and patterns
Notes are useful in analyzing which trading strategies work, and which are worth reconsidering. Make notes on the charts you’re using, the patterns you’re watching, and how certain events impact your trade. Over time, you will be able to recognize the underlying mistakes costing you money. For example, you may come to realize that you exited a trade too early, maybe you set up stops and limits at the wrong places, or perhaps you fell victim to a false signal. Journaling prevents you from repeating the same mistakes.
You can improve your trading technique
Having a detailed record of past trades allows traders to better understand their strengths and weaknesses. Jotting down how you feel is a good idea — it can help you realize whether you’re making emotionally driven decisions that ultimately hurt your trade. A trading journal gives you important insight about who you are as a trader, and what you should focus on to polish up your skills.
You’re able to monitor your progress
The longer you trade, the more difficult it becomes to keep your progress in prospective. Writing down your goals makes it easier for you to remember what you want to accomplish. It also serves as a source of motivation: who doesn’t feel inspired by looking back at where they started and seeing how far they’ve come? Journaling your trading activity allows you to keep tabs on your growth as a trader, helping you become more confident.
The advantages of having a trading journal are plenty; the reasons above just scratch the surface. Journal entries do not have to be a chore. They can take whatever shape and form you want, as long as you are keeping track of the most important information useful for your trading style. Feeling inspired? The best time to start keeping a trading journal is now!Trade now