It’s surprising to see so many novice and experienced traders paying little attention to the importance and benefits of keeping a trading journal or log. To the majority of novice traders and a handful of experienced ones, keeping a journal is probably one of the simplest ways to improve their profitability.
A trading journal allows the trader to organize their trading in an efficient and positive way. A journal in its most basic form is a record or diary of every trade a trader takes, including: Entry price, Stop loss, Targets, reasons why the trade was taken and the outcome of the trade. Most trading platforms such as MT4 offer the trader an overall review of their accounts, showing their profit and loss. However what they can’t show is a real trade journal produced by the trader themselves.
The keeping of a trade journal provides the trader with a visual record of their trading activities. A journal allows the trader to record the reasons behind their trading; this record can be used to analyze losing or winning trades and improve or eliminate trading errors.
Below is a very basic journal. The columns listed are self explanatory; however some traders often include extra details in their journals such as a % or monetary gain per trade. A good habit to keep is adding screen shots of your charts for each trade recorded in your journal. This further enhances the visual aspect and can make analyzing much easier. It’s often a good idea to; if possible, use different colors for wins, losses and breakevens. This again enhances the visual aspect of the journal and allows for better/easier analyzing.
A trade journal is not difficult to make or keep, however like most other aspects of trading requires a disciplined mind by the trader to make sure every trade taken is recorded in their log. It’s important for the trader to explain in detail why the trade was opened and the outcome of the trade. Reviewing your journal on a monthly basis is a good way to start better understanding your trading behavior and patterns. Most traders give little regard to trading journals however once they start logging their trades they are amazed at the benefits this simple element of trading can produce.
