Having a proper trading journal is an important aspect of forex trading. After all, it is the only way to measure yourself and see whether you’re following your trading plan or not. In addition, it also helps points out areas of your trading that may need improvement.
The problem with journaling is that it isn’t an easy task. Not everyone has the diligence or discipline to fill out his forex trading journal for each and every trade.
Furthermore, most traders are so busy and focused on their trading that they don’t fill up their trading journals right away. They put it off for after the trading session, figuring they’ll remember everything anyway. The problem with this is that perfect recall is very rare. According to cognitive psychologists, the human brain is wired to remember what comes first and last in a sequence – everything in between becomes a blur.
For traders, this means that we tend to focus on the entry and exit of our trade, but we don’t pay nearly enough attention to what we are thinking as the trade is progressing. This prevents us from writing down our thoughts, emotions, and analysis in our trading journals. This causes us to overlook our mistakes, and holds us back from improving.
One way to overcome this and maximize your trading review is to videotape yourself trading.
In the past, some traders would have to buy separate equipment (i.e. camcorder) and record themselves as they traded. The good news is that there is now computer software that takes video of your computer screen as you go ahead and trade!
Videotaping your trading can help you review and focus on both how YOU traded and how the MARKET moved. As you’ve probably learned from experience, it’s not that easy to remember exactly everything that occurred as you traded. Videotaping can help you overcome the problem of recall and allow you to have a more detailed assessment of your forex trading decisions. It will help you remember the thoughts that went through your mind as your position was open and give you a basis to review your analysis.
Aside from that, having your trades on video can help reveal flaws that you don’t usually notice. Was your analysis completely off? Or did you have a problem with the actual execution? Were there any market elements or signals that you missed? Watching tape of your trading performance helps answer these questions.
Furthermore, being on record can also make you more alert and focused since you are aware that you are being watched and evaluated. This can make you more conscious of each decision that you make since you know that you’ll be scrutinizing your trading performance later on.
Of course you have to stay disciplined in order to make videotaping work positively for your trading. This is definitely easier said than done. For one thing, you have to set aside some time to review your tapes on a regular basis, on top of the time you dedicate to actual trading. You can opt to set aside an hour or two after market hours to review your tapes, and make sure you establish this as part of your routine.
Another suggestion is to talk to yourself as you trade. Pretend that you are talking to an audience as you explain your thought process before, during, and after each trade. This way, you’ll be able to record your usual psychological behavior and figure out what you could’ve done better.