TRADING JOURNAL; THE DEFINITIVE GUIDE TO TRADING.
The most prominent attribute of the most successful traders, is learning from their mistakes and ensuring they never take the path that failed them once.
Every step of their career is notably put down to analyze why the results were the way they were, if they were credible enough to be repeated, or incorporated in their trading style with a twist or improvement.
A lot of new and inexperienced trader usually try to get to the grub immediately and secure their profits as that is the sole aim of entering a trade, then end up making the same mistake that put them at a loss the week before.
To avoid being at a disadvantage, focus on retaining the information that will be premised in the body of this article.
THE STRUCTURE YOU SHOULD EMPLOY FOR YOUR TRADING JOURNAL.
This strategy i’m going to share with you is. brief but totally effective.
When you think of your trading journal data, think of a tree. A tree has roots, branches and leaves.
We will begin with the backbone of the structure, that is, the Root. The root is the three T’s you will encounter in successfully creating an effective trading journal.
Start by structuring the three T’s. Your Trade Details, The Trade Rationale, and the Trade Outcome.
TRADE DETAILS: The date of execution, exact time of your exit and entry, commodity,asset or currency pair you used to trade and position size(amount invested) will be entered in this category.
TRADE RATIONALE: The reason for that being your entry point, and the reason for your exit at chosen point.
TRADE OUTCOME: Your results (profit and/loss) from the trades you have taken will be entered into this category.
After creating the backbone(roots), you need to create the pillars( branches.)
EMOTIONAL REFLECTION: Clearly state how you feel before the trade, during and after the trade. Take into account any slight deviation from your original trading plan or you stuck to it.
MORAL LESSON: What worked for you? What didn’t work for you? What should you repeat and what should you do away with? What must be avoided while taking future trades?
You have a standing tree, time to incorporate your greenery;the leaves.
FUTURE REALIGNMENT: Ensure to detail any changes you plan to make based on the next trades. Set specific goals for your next trading sessions.
The only water and sunlight your tree will need is your consistent entries.
LET’S DISCUSS WHY YOU SHOULD KEEP A TRADING JOURNAL
RISK MANAGEMENT STRATEGY:
Keeping a trading journal will help you evaluate your risk management strategies and effectively curb unnecessary and avoidable losses.
When you can review your past trades and take apart your setup, you can identify setups were your risk was well managed and also work on the areas that require your adjustments.
REPEATING MISTAKES
Mistakes and losses are inevitable in the world of forex trading. What you have control over, however, is protecting your capital and reducing the percentage of loss you accrue on your account.
The tracking of your performance with the aid of a trading journal will help you make real trading decisions based off your own data, reducing the risk of an unknown factor disrupting your trade setup to a zero.
DEFINING YOUR PARAMETER
With your journal at your disposal, you have a time machine to review and compare your former setups and your improved setups to the former that has worked for you. The journal gathers your statistics and shows you exactly how well you executed each trade. Hence, you have feedback that acts as shorelines for the safety of your capital and profits.
GROWTH AND ENHANCING SELF REFLECTION:
By keeping a trading journal, you are creating your own historical record. Just like in ancient texts, your journal will bring about deep self reflection and you would have created a wealth of knowledge and experience you can always refer to as you continue to learn and hone your expertise as a trader.
By jotting down your thoughts and the logic behind each trade, you can identify your biases and emotional triggers that could be heavily influencing your decision making.
BUILDING DISCIPLINE:
Looking at your past failures will make you wish to never be in that position again. Maintaining your trading journal entries will foster sticking to your rules and trading plan because it’ll create a record of your commitment to mastering your setups.
KNOWING YOUR WEAKNESS
You will certainly be able to pinpoint your strengths and weaknesses by regularly revisiting your journal entries. Gaining insight on your past work will enable you outline the parts that require more effort, or relearning and unlearning.
Your take away from this helpful trading article should be the emphasized importance of a trading journal consisntly being used. It is a powerful tool for improving your trading performance and enhancing your personal growth.
