TL;DR
Most skilled traders use trading journals in their strategies because of their potential value. Trading strategies require careful preparation, careful documentation of existing positions, and careful documentation of any emotions that may arise.
Keeping a trading record and using it effectively is, thus, essential to any trader’s success. A trader needs this in order to keep track of his or her winning and losing trades. The worst-case scenario is that they actually delete their account.
What Exactly is a “Trading Journal”?
Keep track of your trading journals, thoughts, and decisions across strategy creation, risk management, trader psychology, and more with a trading notebook. Keeping a trading record is simple but can yield impressive results with some planning and discipline. The insights it provides could prevent your account from exploding, or they could be an encouragement for it to reach the moon.
Keeping a trade journal is essential for a number of reasons.
- It’s a great accountability tool.
- It helps you become more self-controlled and reliable.
- It aids in the detection of winning trading techniques.
- It’s a record of your accomplishments and failures.
- You learn to be more thorough in assessing potential deals as a result.
Traders who consistently do well do so because they thoroughly prepare their transactions and keep detailed records of their results. You can learn to trade well in any market condition by keeping a trading journal and using it regularly.
How to Create a Trading Journal
Next, you’ll discover a link to a downloadable trading diary template, but you should also read up on how to make your own. There are many different types of trading journals available to suit individual preferences. As long as you have a place to plot out and record your business dealings, you should be fine.
You should begin by making a written document and a spreadsheet for your trading journal (e.g., in Google Docs or Microsoft Word). You’ll use the first one to keep track of specific trades and the second to document your thoughts. You can attach the written report separately, or you can include it as a second tab in the spreadsheet (example provided below).
Second, in order for your trading notebook to have the most beneficial effect, you need to have a clear idea of what you will be recording on a regular basis. Several examples of trading diaries are available online. However, regardless of the format you use, your spreadsheet should provide rows for each transaction. Possible items for these columns:
- Date of Entry
- Exit Date
- Symbol
- Dimension (long or short)
- Cost of Entry
- Positional size
- Notional worth
- Stop loss
- Take Profit
- Selling Price
- Costs of Trading
- The P&L Statement
- Percentage of profit or loss.
- Notes
Some investors will additionally include the time window, setup screenshots, and any other relevant information. The ultimate goal is for the data to benefit them.
Each day deserves its own section in your written document (or a new tab in your browser) where you can record your thoughts and ideas.
The written document is where a trader lets their imagination run wild, while the spreadsheet is where they can see how successful their imagination has been. When starting or updating a trade log, both are invaluable tools.
The discussion ends here. The simple part is learning how to start a trading journal. Over time, you’ll need to hone the skill of keeping a trading log. If you take the time to learn the fundamentals, though, you can use a trading notebook to your advantage in no time.
Stock Market Journal Format
That’s fantastic news! Binance Academy has provided you with a trading journal template that is both straightforward and functional. To use it immediately, simply select File > Make a copy.
In this case, we’ve included a second tab that acts much like the paper document we explained earlier. You can keep note of your reasoning behind each deal, as well as the outcomes, in a journal.
Tutorial on Keeping a Trading Journal
Making a trade journal is easy; knowing what to do with the information it contains is a whole different story. A trader who has made money before can learn to make money with the use of a trade journal.
You need to have an appealing case in mind before entering into any deal. Here’s where the paper you prepared will come in handy.
When you check the market every day, thoughts and emotions will continually emerge and circulate within you. You must document your thoughts and feelings in order to determine what influences your trading success or failure. This may include market behaviour in general as well as previous, current, and future trades.
You will also use this written piece as proof for or against the merits of a potential business strategy. You need to flip your trading strategies on their heads to see their flaws from every angle.
After you’ve documented your feelings on paper, you can go on to the spreadsheet.
The spreadsheet you’ve created is more of a logical space than a creative one. It is crucial that you maintain an organized and up-to-date record of all of your transactions here.
Keeping precise records of your trading wins and errors is essential for a productive diary. You need to keep precise data in your spreadsheet if you want to know if the strategies you outline in your paper will be successful.
Maintaining a record of your trades immediately after making them is a wise practice. That way, you can keep them in mind and avoid having to look them up later.
It’s also a good idea to make it a daily habit to look over your trading log spreadsheet. By doing so, you may assess your overall degree of exposure and determine if you have a chance to enter additional transactions.
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Final Thoughts
Whether you prefer swing trading or day trading, it makes no difference. Making a living as a trader is not an easy task. You will be wandering the markets aimlessly if you don’t take the time to map out your strategy and track your results. And that’s a recipe for disaster almost every time it happens.
To better recognize patterns and market trends, you should learn to keep a trading log and use it to your benefit. Taking the time to write down your thoughts, feelings, and trades is a low-effort investment with potentially high rewards.