You need to keep a trading journal.
Isn’t that only for silly high school girls who write about their silly crushes on silly high school boys?
Ok, not really… high school girls keep DIARIES.
Boys also (we don’t discriminate).
Forex traders keep trading JOURNALS.
Two entirely different things! Get it right! Geez!
Keeping a trading journal is actually a crucial task in any performance or goal-oriented endeavor. The key is to have some way to measure, track, and stay focused on improving your performance.
World-class athletes do it to keep track of what helps them to be better, faster, and stronger on the field or court.Scientists do it in the process of finding their next greatest discovery. And forex traders do it to help get them duckets!
What “getting them duckets” means in simple terms is to become disciplined, consistent, and most importantly, profitable.
A disciplined trader is a profitable trader and keeping a trading journal is the first step to building your discipline.This might sound simple or easy but we assure you that to actually get started can be very difficult.
In fact, many forex traders give up after a while and rely on the logs that the forex broker provides.
The logs or transaction history from your forex broker gives information that is, at best, marginally useful as it doesn’t tell you much of WHY you entered and exited the trade.
That information provides NO help to your next trade.Zero. Zilch. Nein. Nada.
A trading journal isn’t just about writing in the prices of your entry and exit and the time you executed the trade.
The trading journal is also about refining your methods and mastering your own psychology.
To be even more specific, it is about your individual emotional psychology before, during, and after the trade.
For example, your trading method says to buy USD/JPY.
But your gut feeling tells you that the trade is NOT going to work…
So you remind yourself, “I don’t think this trade is going to work. BUT I have to follow my trading plan so I’ll take it.”
During the middle of your trade, the price comes 3 pips away from your stop loss and you’re thinking, “OMG. This trade isn’t looking so good. I knew it! Why didn’t I listen to myself? I’m such an idiot! I’m about to lose here! I’ll just exit now.”
You then decide to close your trade.
A few moments later the price shoots to your original profit target. Had you stayed in the trade you would have made a gazillion pips!
This is why you should write a trading journal. This is a classic case that probably happens to too many traders.
We fail to stay in the trade, we fail to trade the plan, and most importantly, we fail to distance our emotions from our trading!
If you keep trading like that and you don’t keep a trading journal, the balance on your trading account will become a big fat ZERO before you realize what you’re doing wrong.