Forex trading is something you learn with experience. With each trade you do, you are gaining more expertise in various aspects of the trade. A trading journal records your daily trading activities so that you can evaluate yourself based on the trades you did and ensures that you get the feedback about your trades done on a daily basis. You might be thinking brokers and the trading software will save all the details for you and then why would you need an additional JOURNAL.
Trading journal saves all your trades done and can be of great help when you want to get a historical perspective of trading over a period of time. To give an example, you can go back and quickly identify which currencies worked for you in the past under similar market conditions. Thus if you record your trading activities, you will have great amount of historical data at your fingertips as and when you need.
Record of trade plan
Trading journal also includes your trading strategy wherein you record the actual numbers like your target, affordable loss, the currency pair etc. Thus before entering into trade, you can actually record your trading plan in the journal and then follow the plan.
Trading methodology review
If the trading journal is well organized, it also serves as an analytical tool. You can actually verify if your strategy worked over time or how did the trading go in various market conditions etc. Can be thus used for reviews over a period of time.
Boosting your confidence
Once you have trading activities recorded you will get to see the pattern in the way you have reacted to various situations. What we mean is that you will gain more confidence in the way you handle a loss in Forex trading. You will be emotionally balanced when you see the previous cases you have lost and the steps you have taken to recover from those losses. That’s too cool.
That said, now let us take a look at what should be included in a trading journal.
The image you see above is just a sample entry created for making you understand the basic things you see in a trading journal. Always keep in mind your trading journal should reflect your styles and goals. So ensure that you capture everything in the journal. In addition to the trade attributes like price and other statistics, following are some of the items which can be included in your trading journal:
- Trading Method/strategy
The strategy you would like to follow for the trade can be documented. • Risk management plan
Your plan to manage risks associated with the trade.
- Market views
Your analysis and views on the market conditions.
- Previous mistakes
Lessons learnt from past experiences in similar trading conditions help you improve yourself. •
Your performance from a trade execution cycle.
It is also recommended that you should keep a journal two ways:
- You should maintain a list of details about the trade in a tabular manner as shown in the image above. So that you can aggregate and see your positions anytime you wish too.
- In addition to it, you should also keep a print out of the chart you used to trade and mark your entry time, price, exit price etc. in the chart. Trust us, this will be really helpful in the long run.
Ensure that you have a trading journal with you even before you start trading. Let this be your trading habit. You will see that gradually it becomes a practice and you will use it with ease. Trading journal will then become the key to your success by giving you the confidence to trade. Thus, keep track of your performance through your trading journal and enjoy trading.