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Forex Trade Journaling Do’s and Don’ts

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When we try to get better, we learn. Learning is a process where we consume relevant information and use it for our goal. Forex is no different, and journaling is one element in this process. Now, what happens when we have too much information or when we have bad ones? Well, it is worse than not knowing anything about a topic, we will also need an open mind to accept what we know might not be true. Objectivity is common to scientists, but this mindset is extremely helpful to forex traders too. When we have an open mind to accept what is producing better results, only success awaits us on the forex. Journaling is the keeper of what we are doing, what works, what not, what is better. It is not a debate if you should have one if you plan to become top among the 1% who make it in this game.

According to many professional prop traders, and other professionals, most of the information is redundant when you start learning. You will need to synthesize what is good and what is bad. This is not easy to do when you do not have experience. To pick up good things for you is even harder with so many forex trading indicators, strategies, tools, and robots. Even if they are good in practice, they might not work for your personality, needs, setup, etc. The right way to journal your activity when trading is also obscured with too much redundant information out there. This is the point where this article tries to help, there are so many sources about journaling that do not give you the good stuff, at least not right away. You will have to dig it, and know where to dig.

Professional traders keep it simple, not just about trading, but journaling too. If you have spent some time reading about forex, maybe you have stumbled upon the phrase “Keep It Simple Stupid” – KISS. Keep that one in your mind, it also applies to journaling. Now, when we take a look at one of the “best” places where to learn forex, babypips.com, and regarding their Journaling 5 most important things article, you will notice a lot of theories before you get 5 bullets what you should have. So all that information above is just to fill up the webpage. According to prop traders, you do not even need the first four.

The point is all about getting the mistakes out. Mistakes are easy to find out, the biggest losses are the result of those mistake trades. The nature of the mistake could be technical, your indicators are not suitable for that timeframe, for example. It may be psychological, moving Stop Loss levels. It also could be inadequate Risk Management, but you should first define an optimal plan about this before any trading. For every mistake you have ironed out, know that you have added (approx.) 1% to your account. It has the same effect as finding that “perfect” confirmation indicator you have spent months searching.

Of course, some traders do not journal, some do. If you would have to pick one to invest in if they are equal in all other points, who would you choose? Not a hard choice, by some statistics, the ones that have a journal are way better performers. Is it because of the mindset or is it the mistakes ironed out from journaling? It is both, one implies the other. Here is how to put it together, the easy way.

For starters, you need a spreadsheet. You can use Google Sheets or Microsoft Excel, it is the same. Once you become advanced you may use specialized products for journaling but for now, you do not need them. You need only 5 columns. You should already have your Risk Plan set up, it should be constant in percentage terms per position for multiple assets> so you do not need to enter the position sizing, it is always 1% of your account, for example. Then, if you go to the daily timeframe – the best timeframe that is suggested by some trend-following prop traders, you can also scratch that column out too. To make it even simpler, you do not need to enter your entry times! More about this later. So by making it simpler, it takes a second to fill it and not overwhelm with the information you do not need.

The first column you need is the currency pair. That GBP/JPY might be running nicely for you but it is a matter of time when it will start to consolidate, but the column is just for reference. In the second column is the Short or Long trade direction. Also for reference. The third column is the number of pips you have gained or lost from a trade. Do not enter the dollar amount here. Note that if you have a complex scaling in and out position management then the result of the final pips needs to reflect it correctly. Depending on how complex it is, you may need some averaging and IF formulas.

The column four is a bit different than the usual journaling. It should contain a screenshot link of a trade. You can sign up with a service for this where you upload your images. You may need to draw a line when you have entered and exited. Note that the MT4 also has the drag and drop feature for this. Open a Journal tab and just drag and drop the position entry from the list onto a chart window, you will see a dashed line that represents the entry and closure of that trade. This way you can see if you have exited at the right time, where was your Stop Loss, was all this a good idea, etc. This is a much better alternative than to enter your entry and exit time stamps.

Column no 5 is your comments area. All normal trades like your Take Profit was hit, you exited, everything is fine, do not need a comment. There is no mistake here. If you have a losing trade but just because the trade did not go your way, it is still not for comment. Do not try to win every trade, try to trade as the system says. Now, have you made exceptions to your system and let a trade go farther? That was not the system, that was your emotions and gut feeling and these are catastrophic to your account. Also, you may see a resistance line coming up and took that trade off before the exit signal. If this is not a part of your system or plan, then this is a mistake. So write these mistakes down.

These mistakes are now nicely visible. Do they repeat? If the answer is yes, half of the problem is solved, you know what is bringing your account down. The other part is of course the solving process. Most of the mistakes made are not accidental mouse clicks, they are psychological. You are on the way to make your trading system work. Now, the power of the journal cannot iron these out but it will give you pointers of your weak spots. Eliminating weak spots can be done in various ways, depending on nature, as described in another article. Journaling may expose you in a way you will not like. It is something you do not like to see in front of a mirror, so most will be ignorant. It is a form of self-criticism and revealing what is not good about you when it comes to decision making but also in life.

In forex, journaling is a must for top traders. You may wonder why your system and Money Management does not give you results at one point, and the reason will be the lack of journaling. This is the element that separates the best from those who fail. The best put in the work. There is no quick way to getting to the top where you can consistently make money out of forex. This article has shown you a simple way to make one, cutting all the redundancy, and get the most important out of journaling – to find your mistakes. People who have put in the work do not have to wait for the effects to reflect on their account, it is instant! Do it right and, as it is usually said about forex, the sky is the limit.

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