There are three elements for sustained successful trading:
- Having and executing a good trading PLAN.
- Having a good trading system as part of that plan.
- Review and improve your trading performance and plans.
Every forex trader should maintain a journal that focuses on these elements.
Your trade journal is a log of all trading activity. This journal’s objective is to monitor both the performance of your trading system AND your ability to execute it with consistency (follow your trading plan).
Poor trading systems are less frequently the cause of poor trading performance than the inability of the trader to properly apply them. That’s following the Trading Plan. Your trading journal is intended to make sure you do just that.
A trading journal provides any serious trader who wishes to make money a tool to help them evaluate themselves objectively.
Journals are only as good as what is written in them. If one fails to accurately track trades, it becomes hard to judge trading performance.
Start to maintain a trade journal. These both should be ongoing efforts, not just a one-off for the sake of completing an assignment. Be thorough and honest. Do not short-change YOURSELF by failing to put in entries or through incompleteness.
Learning to write and maintain a trading journal will build discipline in you. Not only that, when you reflect on your entries after a month of trading, we guarantee you will learn a lot about yourself and your trading psychology.
You’ll clearly see what you’re good at, what you suck at, and what the best way it is for YOU to trade. This is something that no mentor, no book, no video, no seminar can teach you. You have to experience it yourself. Only through this experience will you become a successful trader.
To build the skill of trading, you must have the will to maintain a trading journal.
Here’s some final advice to keeping a helpful trading journal:
- Always begin the journal before the trade, and end it after the trade.
- Write down everything. Don’t leave anything out. Be honest. If you decided to play Call of Duty while you were in a trade and forgot to exit your trade, write that down, and explain why.
- Pay very close attention to your emotions. Then make sure you write them down.
- Make sure the journal includes observations about you and your trading and about the forex market. We’ve found that trading journals are usually skewed toward self-analysis and include little in the way of market observation. Take a screenshot of intraday charts of each day’s action and write comments on them. Make note of patterns that you are watching for. After a couple of months, you will start to see the patterns emerging in real time. The trading journal is a learning tool and a great mechanism for training your eye to see the setups you want to be trading.
- Nothing is too silly to record inside your journal. Write it down. Write down whether you missed a trade because you were watching the latest episode of Game of Thrones, or playing Call of Duty or you were busy talking to your sweetheart. Write it all down!