September 15, 2015 at 5:48 pm
Keeping a journal should be at the top of any to-do list in any goal-oriented endeavor. You need to be able to measure, track, stay focused and improve your performance. A disciplined trader is a profitable trader. Starting a trading journal is the first step to building that discipline. You might be wondering why you should take the time to keep a trading journal if every broker provides real-time stats of your trades. The simple answer is that these statistics provide NO information about WHY you took the trade. It might sound easy to start your journal at first, but believe me, it can be very difficult.
Having a coach or mentor in anything in life will greatly speed up the process of your learning process. They are there to guide you every step of the way, pointing out your mistakes, recognize the things you did well, and keeping you disciplined throughout the journey. Finding a trading mentor can be hard to come by, so we as traders have the next best thing – a trading journal! An up to date and detailed Forex trading journal can be just as good as having a coach or mentor to watch over your shoulder. Keeping a journal might be time-consuming, but it could be more useful to review your own trades than to read a book or attend a seminar.
No Forex trading journal will ever be the same. This is because we are all different, and we use different trading styles. However, there are a few key points that you should include in your daily journal entry.
At the end of the day, you should go to all your trades. Identify what factors and steps you could have improved on. This is where your opportunity comes in to improve as an online trader. Don’t be vague; identify SPECIFIC steps that you will take to improve. There are no right or wrong answers here; you just need to be as honest with yourself as you can be. Here are a few factors that you should go over:
You should follow the above steps every single day of the week that you trade. Don’t leave it till the following day, because you will forget or get lazy, trust me. At the end of the week or month, it is important that you go over all your trades and see where you made mistakes. Doing this, you can identify what is working, what is not and what you can improve on in the new month. Another crucial thing you need to do at the end of the month is you have to analyze your performance statistics. To do this you need to calculate and track the following statistics:
This is your total gain minus your losses and expenses related to trading for the month.
Calculate this percentage by taking the total number of wins divided by the total number of trades you made and multiply it by 100. (e.g. 30 winners / 40 trades x 100 = 75% win rate)
The easiest way to calculate this figure is to take the calculated win percentage above and minus it from 100. (e.g. 100% – 75% = 25%)
Go over your trades and count what the largest number of trades was that you lost in a row. This number will determine your max draw down which is the worst possible scenario that you have experienced for the month. If this number is uncomfortably high, you need to make adjustments to your trading plan.
This number will indicate what your average draw down per month will be. By knowing this, you can control your potential risk for a series of losses for the month. The formula to calculate this is pretty complex so I would suggest writing all your consecutive losses down and spot with your eye what the average will be more or less. (e.g. 2, 2, 2, 3, 4, 4, 4, 4, 5 – you can see that your average losing streak was 4 losses in a row.)
Calculating the above statistics will enable you to find ways to maximize your trading profitability, find the correct trade size and determine the best trading situations for you and your trading style.
Now after all this information you have gathered and analyzed, what do you do next? It’s actually pretty simple to tell you the truth. Find out what works and stick to it. Find out what doesn’t work for you and stop doing it. In order to find out what works and what doesn’t, you need to ask yourself some of the following types of questions:
You should ask yourself – do I want to go the extra mile or do I want to be lazy and risk failing? Many Forex traders make a go at a trading journal, but they fail to push through and give up. To build the necessary skills, you must have the will to maintain a trading journal. My advice for a helpful trading journal is:
-Write down everything that comes to mind. Be honest and don’t let anything out. Nothing is too silly to add.
-Pay close attention to your emotions and make sure to write them down.
Once you know what your trading system’s expectancy is, you can act with confidence. Confidence will enable you to execute trades according to your plan. It will keep you from second guessing yourself. Having a trading journal will be an invaluable investment for you and your future trading success.
September 16, 2015 at 2:42 am
Alex…. I think you outdid yourself. Thank you for all the valuable information and doing as you said you would, really means a lot! I am going to start using my journal as soon as possible. Hopefully this will force me to be stricter and help me to stick to my trading plan.
Thanks again, you are the man 🙂
September 16, 2015 at 7:08 am
Hey Deandre, I put a lot of thought into it so I’m super stoked that you liked the article.
I am sure that it will be of benefit to your trading in some way or the other. The name of the game is to keep your journal as detailed as possible and to actually go over the trades you took like I outlined in the article.
Don’t give up! If there is anything that you need me to explain just shout.
September 16, 2015 at 8:25 pm
Keeping a trading journal sure does sound like a lot of trouble, but I would try anything at this point to increase my chances of succeeding. Does anybody else use one? And do you find it usefull?
September 16, 2015 at 9:03 pm
I made a go at keeping a journal a while back but I only managed to do it for 3 weeks. It was just so time consuming.
I must add that I did learn a few tricks during that time though.
Maybe I should start one again. . .
September 17, 2015 at 5:24 am
Great Idea! I will start one from tomorrow onwards!
Thanks for the tip 😉
September 17, 2015 at 10:13 am
My emotions are KILLING me, I just can’t stay disciplined! I currently have a trading journal but I never actually look back at what I did. I think this is where my problem lies. I will make a point of it from now on to review all my trades.
You must be logged in to reply to this topic.