A trading journal is essentially a log of all of one’s trading activity, which is used by traders of all different skill levels to help improve their trading strategy. While beginners might benefit the most from journaling, we can always get better, therefore more advanced traders need to consider journaling as well. When you have all the data in front of you, it will be easier to note whether things are going right or wrong.
First and foremost, you’ll need a good trading plan and system. Your trading journal comes in after you’ve accomplished some trading activity so that you can review and improve your trading plan. However, you need to track important information in your journal for it to work. If you don’t log some of the most important details about your trades, then you might miss crucial information when you go back to analyze that data. This is what most traders log in their journals:
- Why did you decide to enter the market with a trade?
- What time did you enter the trade?
- What (precise) price was it when you entered the market? Enter this to the last exact pip.
- How long was the position open?
- Why did you exit the trade?
- How much did you win or lose?
Be honest when logging details about why you entered or exited a trade. If you got caught up talking, cooking, or doing something else and you simply forgot, write that down. If your emotions played a role in your decision, you’ll also want to note that. Were you feeling the excitement? Did anxiety cause you to close the trade before you initially intended to? Be sure to include information about the market that affected those decisions as well, rather than only focusing on your personal feelings. Otherwise, you might blame bad trades on yourself when it was really caused by the market’s behavior. Always be honest when logging information, even if it makes you look bad. Keep logging this information, even if you forget to use the journal sometimes. Don’t make the mistake of abandoning your journal once you improve in skill.
Having a trading journal can be a key to success in the Forex market. If you log information in detail, the journal will become an excellent tool that can really help to hone your strategy over time. Remember to be honest with yourself and don’t forget to note the way that the market is behaving. Keep using your journal, even if you forget to log a trade or two because it will be helpful for long-term success. Your trading journal will prove to be one of the best, most customized tools in your trading arsenal.