Importance of Trading Journal
I suppose that nobody doubts about importance of proper trading plan and everybody should have one and use it but this article is about trading journal.
You may ask
why would you need trading journal.. Well, I also asked myself, why would I need
any trading journal?.. It’s wasting of time which I could spend by making $$$ (in fact by losing my money in that time) but now I see trading journal as
necessary part of trading and I also have a big passion for keeping updated record
of not only trades but even emotions, psychological state of mind and mood.
This keeps me disciplined, motivated and it also provides clean overview of my
trading progress and account statement. I can optimize my trading plan rules when I have a long track of trade records, the more records we have the better and more important journal becomes.
Traders who ignore trading journals don't know their past and also they don't see their progress.
"We can't know where we are going if we don't know where we have been."
Trading journal is key to making consistent money and keeping long term success in the markets.
Before I describe my trading journal:
I trade pure
price action without any indicators (except EMA) on daily charts so I’m building
consistency and I analyze my charts at about the same time each day. I recommend use MS Excel.
You probably heard that you should have some simple journal which will carry basic info about your trades (date,entry and exit price, SL, TP etc.). Well, I made it this simple too but by time as I grew up as trader I added more parameters like swap, commission but even PA setup, TF, commentary before trade and after trade and to be sure that I follow my trading plan I recently added „confluence“ (which contains S/R levels, TL, recent breakouts, trend etc.) and „plan agree“.
Now, when I see some signal on charts I think forward about what I will write into my journal and if it will agree with my trading plan. Trust me, this protected me many times from taking stupid trades born of emotions. I differ results by green and red color for clarity so when I make some trade which doesn’t meet criteria of the trading plan I will mark that box by red color which maintains clarity when I check my trades back.
also keeps equity and as I said emotions log before and after every daily routine
(it lasts about 30-60 minutes) and also my view on my watched majors pairs in
next day. Of course I save screenshots of my trades in 2 screens way – entry and
exit which I sort by date and these trades have to correspond with trades log in my journal (for example 10.1.2012 IN S USD/JPY for quick reference between trades log and trades screenshots).
My trading journal
It consists of "Trades log", "Daily routine", "Equity", "Equity log".
I translated parameters names so I hope you will understand to purpose.
Values are only ilustrative.
1. Trades log
The blue and red/green ones are calculating automatically through simple math formulas. I set only few things like date, time, entry/exit price, pre-planned SL/PT from which are pre-planned and real RRR calculated and notes (just white boxes). When I take trade I fill these boxes and especially stuff about confluence and "plan agree" are the most important for me because I make myself sure about taking or not taking the current trade. Sometimes I realize that I don't have anything to write into the support factors and the trade is not worth to be taken.
These parameters are useful for later analysis when we have a long track of trades. We can optimize our trading plan if we see that trades on 1H TF were more successful than 30M over long period or we decide to stop using some setups because they are not as good as others etc. We also see if we are able to follow our trading plan without breaking and this helps us build discipline which is very important not only in trading but even in our daily lifes.
2. Daily routine
This is my main, daily "job" where I start first when I analyze markets. I am aware that somebody can consider this as pointless but for me is this the best thing to be in touch with market every day and it is also great log of my feelings and it shows me things that I need to concentrate on (for example being angry after a losing trade etc.) and try to fix these problems. It also contains my next day market view and in the results are results from the previous day (if my opinion was right).
This is a classic Excel equity which may ilustrate many data like trades, monthly % growth etc.
4. Equity log
Equity log contains only number data taken from Dukascopy trades log, portfolio log, intraday statement etc. I make charts from these numbers.
Well, to be honest I really love my detailed journal and trust me that if you have a nice green stats (I mainly mean "agree with trading plan") you won't take stupid trades and you become more disciplined and take only good trades. It is also window into your mind and emotions and you begin to realize your behavior in markets. I also keep my monthly goals in it which keeps me motivated.
In conclusion I don't say that this is some perfect template of trading journal but I try to show you how it can looks like and why it is so important for all traders. The important thing is that you should create your own journal with for you important parameters which will suit you and you will enjoy updating it regularly with right decisions and you will be able to learn from mistakes you made.
I hope you enjoyed this article and please feel free to leave a comment.