Are you completely satisfied with your stock trading? Do you sense that there are areas where you could improve your performance?

Journaling your trades is a very constructive step to making that improvement. But you have to make sure the right information is in the trading journal, so that you can base your analysis on it.

Here’s what you need to include:

1. All the basic information regarding each trade, including time, date, amount, expected gain, and profit or loss. These are just the starting points for your thought process.
2. Market conditions, including overall direction, trading volume in terms of number of trades and total value, any changes of direction during the trading day.
3. Indicators of sentiment: For example, you might note the VIX if you think a risk-off climate is emerging.
4. Sector movements, for example if defensive stocks are strong on a given day when you trade, or if retailers are doing especially badly – whichever sector changes seem relevant.
5. For the stock that you wish to trade, its low and high for the day, and perhaps for longer periods if you think the movement is relevant. If a stock has been at a historic low for a long time, you certainly want to note the fact.
6. Any announcements or changes at the company you are trading in, for example, management changes, results announcements, etc. There may be less sensational news from the company, simply about a new product or new market entry that could be worth noting.
7. Your expectations for the trade. Why did you make it? How did it fit into your strategy? What was the key factor that made you pull the trigger?
8. What happened. Did the trade realize your expectations? Was it quick and easy, or were there changes in the market that you didn’t expect?
9. Your feelings about the trade. Was it a sure thing, as far as you were concerned? Were you coldly analytical about the trade, or were you reacting emotionally, just going with your gut?
10. How much risk did you take? You may have different ways of calculating the risk, whether in terms of the amount invested in the trade, or your relative certainty about the way the market would move. If the trade succeeded, did it earn enough so that you still feel it was worth the risk? If it failed, was it too risky, or were there other factors that you think determined the failure?

These points are, of course, not the only ones you should take into account when trading, and you should always list everything you feel could be relevant in your journal.

But these basics should always be present, so that you have a firm foundation on which to build your analyses.

If you trade stocks on a number of international exchanges, then trade journaling can be of enormous help to improving your performance.

Trading in London, Frankfurt, Sydney or even Shanghai is easy and cheap today, as the Internet has made access to local trading platforms a snap. Setting up an account abroad is no longer a challenge, and the chance to find market conditions that fit your strategy is much increased.

But keeping track of your performance across a number of different exchanges can be a significant challenge. You do have to take into account currency fluctuations, which are a major issue in this time of increased volatility. You will want to keep careful track of the currencies you trade in, particularly since you may wish to switch funds from one exchange to another when the value of local money changes.

Obviously, the economic environment will be very different in the international markets you choose to work in. Australia may be slowing down at the same time that Sweden is picking up, and that of course means a different approach to trading on the different exchanges.

You will also need to tweak your strategy for each market. Investors don’t react the same way in London as they do in New York. In some markets – Shanghai provides an extreme example – the rules governing equities investing are quite different from those of other markets.

And there’s more, so, with all these factors to consider, trade journaling becomes imperative to control strategy and boost performance. With each trade you make in London or Frankfurt, you will want to make careful notes on sentiment, environment, trading volume, and even factors like how markets behave at specific times.

You will have a trading strategy honed on Nasdaq or NYSE; you will have to carefully evolve it so that it fits Milan or Madrid. This will mean careful journaling to show where the strategy is successful, and where it might profit from some improvement.

The great thing is that, by journaling your trades on the different exchanges, a great number of strategic patterns will emerge. While trading is different from one international exchange to another, there are important similarities that will produce patterns that work on both exchanges, perhaps on all of them. You will be gaining a wealth of experience by trading across the globe, and you will be able to put it work wherever you are trading. Journaling will provide the analytical basis for successful strategies, and you will see your trading improve sharply as a result.

 

Google offers cloud spreadsheets– known as “Google sheets” — this could be used as an online spreadsheet trading journal, it is a step up from Microsoft excel as a trading journal.

We don’t recommend it. You will not get the full benefit of trade journaling if you use the Google sheets template as opposed to high-quality trading software such as TraderSync.

The ‘Why’ of stock trade journaling

The second version of the Google Sheets template is introduced as follows:

“The purpose of this spreadsheet is to help Forex traders to save their trades on a weekly, or monthly basis, to let them update every order or position as soon as the status is modified. This file helps any trader in monitoring his trading.”

But, right at the start, the Google Sheets template misses the ‘why’ of stock trade journaling. A trading journal isn’t intended to “monitor” trading (it’s not even clear what that means exactly).

Trading Psychology

A trading journal is intended for analysis, to enable you to find patterns in your trading and learn how to improve performance. Part of this is to track your trading psychology – the emotions that helped to trigger the trade.

Because it seeks to “monitor,” it’s not surprising that the Google Sheets template doesn’t enable this kind of analysis.  Instead, there are input fields for basic trade information, stop data, and means of calculating risk-on trades. All of this is useful and necessary, of course, but it’s only part of the whole.

There is a small space for “comment,” but only for a few lines. Here, high-quality trading software offers a great deal more in terms of options to record strategy and emotions – the key elements for trading journal analysis.

Spreadsheets Journals can’t download your trading history

And high-quality trade journaling software offers yet more than the Google Sheets template can provide. Some high-quality trade journaling software has transfer applications, enabling you to download most trading information directly from your trading platform. Some trade journaling software also includes options to generate reports, pulling together all the information you need into a functional form.

And some high-quality trade journaling software even has options that permit you to track the state of your emotions when you make a trade.

Trading psychology is more influential than logic for most traders, experts say. Greed makes traders hold trades too long, in the hope of raising profit – instead of the trade often goes sour.  Anger at losses often incites traders to make bad decisions, to forget strategy and to jump into a bad trade out of ‘revenge.’ Fear, of course, pushes traders to close trades too early and to earn too little from them.

One of the great virtues of trade journaling is that it helps a trader to see where decisions were made out of greed, or anger or fear, and not as part of an overall trading strategy.

But, with a Google Sheets template-based journal, you can’t address all of that. To get the best from your trade journaling experience, try high-quality trade journaling software.

Many traders have original approaches to keeping a trade journal. We’ve seen pros who scribble a few words on the back of an envelope, and then shove it in their pocket, and others who record a few words on their phones. This may seem to save time, but the lack of comprehensive information means that this kind of journaling doesn’t offer the full potential benefits.

And some professional traders still use spreadsheets to do their journaling, although solutions exist that are far more user-friendly and productive.

We shouldn’t be surprised, however, because we’ve all been taught to use spreadsheets to support any number of productive business activities. Some people still use them for everything from inventory management to financial projections, despite the wealth of alternatives.

Using spreadsheets, whether Excel ones or similar products, for stock trade journaling isn’t the most productive approach. It’s time to put aside this antiquated tool. The reasons include:

1. Spreadsheets are meant for numbers and formulae. Trade journaling involves some numbers – stock prices, profit, loss, etc., but it involves a great deal more, like noting strategies and analysis and market conditions and your emotions. Getting all that onto a spreadsheet isn’t easy, and the frustration involved will discourage you from journaling.
2. Entering data into spreadsheets is a tedious task. You are squeezing your notes into little boxes intended for interactive calculations. But your journaling notes can’t be analysed by the spreadsheet software, so you are simply using an inconvenient format.
3. It is very hard to find and correct errors on a spreadsheet. You have to delve through a mass of closely-packed data and notes. Again, trying to make it all work will discourage you from journaling, which should be an easy and pleasurable task. You should look forward to journaling; it shouldn’t ever be a chore.
4. Spreadsheets won’t crunch all your data for you. You can get them to add up the numbers on your trades, but you can’t get them to pull together non-numerical information into a report. High-quality journaling software can do just that: It can create reports that give you precious information about your trading.

Clearly, there are better tools to use for stock trade journaling than spreadsheets. But there’s still one more reason: Spreadsheets are ugly and boring. Why stare at this outdated and unpleasant format if you don’t have to?

There are high-quality trading journal applications available. These have user-friendly interfaces, which are also attractive to look at. They do not pose formatting problems, as you just enter the information you wish to add in the appropriate form – you don’t have to squeeze it in either. What’s more, these applications can generate useful and pertinent reports to help you refine your trading skills. It just makes so much more sense.

You know that regular entries in your stock trading journal can help you to improve your performance. But, like many people who trade stocks seriously, you find the process of making entries tedious, and so you ‘forget’ about it a lot.

But you cannot succeed consistently as a trader if you do not evaluate your performance. So keeping the journal is a critical resource for trading success.

Scheduling helps traders to make the effort to keep a careful journal. As traders receive the benefit that a journal provides, it becomes easier and easier for them to get motivated to keep one carefully.

But when is the best time to add to your journal? In the middle of a busy trading day, you may not have time to pay much attention to anything else. At the end of the day, when you are finished trading, is probably the best time to schedule your trade journaling.

You may indeed be tired at this time, and eager to move on to leisure activities, but you should take the time to make full-scale journal entries about each trade. This is when the context and emotions involved in making the trades are fresh in your mind, so you should seize the moment and get it all down on paper.

But, if the end of the trading day is not a good time for you, consider updating your journal the next morning, first thing. At this time you will be refreshed and ready to get things done, but you will still have a fairly good recall of what happened on the previous trading day. Some traders really prefer the next morning for journaling, as it gives them time to think carefully about what they did, and why they did it. They gain a bit of perspective in exchange for perhaps not remembering every trade as clearly as they did the day before.

What you do not want to do is to wait too long before updating your journal. The longer you wait, the further away you are from the emotions and ideas that generated the decision to make a trade. It’s very important, from the point of view of getting the full benefit of your journaling software, to have a full and complete description of your thought process when making the trade. It is this process that a careful review of your journal will help to improve and refine.

When should you schedule a review of your journal? This depends on the volume of trades that you make. You will want to have a sufficient number of trades recorded to make analysis fruitful. But you do not want to wait too long, because you will lose opportunities to improve your analysis and trading thought process. This is rather personal: For some people, a few days is a good time, while others want a larger critical mass of trades to analyse.

Traders can obtain great value from a journal. It is a rich mine of information to be taken up in analyses of different kinds. Honing your analytical skills will give your trading performance an important boost.

Gain a Historical Perspective

With a comprehensive summary of all your trades over a period of time in the journal, you will gain a historical perspective. You will be able to see, at a glance, what your cumulative results are, and how your trading has evolved over time.

Most traders depend heavily on experience. No matter how much one learns in books and courses about trading, it is the time spent making decisions and seeing what happens that forges trading skills. There is no alternative to just ‘getting your hands dirty,’ because, under pressure, you test your strategy against your emotions.

Journaling allows you to look back and see just how successful you’ve been at making decisions under pressure, but also how your experience is building your trading skills. You see your strategy evolving over a period of time, and journaling allows you to track that evolution and to maximize the part that is working. By carefully noting every aspect of your decision-making process on every trade, you will be able to see what is coming from your brain and what part comes just from your gut. This helps you to use the brainy part more, and to control the emotional aspects.

But the journal does even more. The journal becomes your personal performance data base, setting benchmarks from which you should seek to improve. With the journal, you build the logic of your strategy by seeing how it has reacted to tests again and again. When you need to learn more from trading resources like books and videos and courses, you will know exactly what kind of information you need to take from them.

Back to the Future

Each journal entry you make should include an explanation of why you made a trade, and what your expectations were when you made it. This, however, is not just to compare plans with results.

As you go back in time to study your plans, your analysis, and your emotional state when you made trades, you will find patterns emerging. For example, you will see that under bull market conditions, you tend to look for a specific type of stock. It will become clear, if the strategy isn’t working, that you should try to look for another type. Patterns will emerge that will permit you to recognize a favorable trading setup much faster, and your quicker reaction will mean improved performance.

How does the journal help you to trade? The journal converts wishful thinking into concrete planning, based on more precise observations. With high-quality journaling software, you can make this transition easy and seamless.

Stock trade journaling is a powerful tool to help you improve your trading performance. It will enable you to:

• Find patterns in your trading that bring out winning and losing strategies;
• Track the emotions that are affecting the way you (and all traders) make decisions;
• Become a consistent and disciplined trader.

Here’s a step-by-step approach to how to use your trading journal for analysis of your performance.

1. You make a trade: With high-quality journaling software, you can export from your trading platform all the basic facts about the trade, including number of shares, stock price, time of execution, entry trigger, eventual exit trigger etc.  These are fundamental to your analysis.
2. You should also include detailed data on market conditions, emphasizing the aspects that influenced your decision to make a trade. Was the market trending higher or lower? How intensive was buying and selling volume? Was activity in the sector in which you made the trade heavy? What about cross-market trends? Have you also taken into account recent economic activity that could affect your trading? All of this should be noted in your journal.
3. The situation of the company whose stock you are buying is clearly a critical factor to be considered. You should first note how much outstanding stock the company has, and when stock has been issued in the past. Then indicate the company’s recent results, going back at least a year, along with any news that has come out of the company that might affect its performance, like a management change or a new product release. Any changes in the sector in which the company operates, as well as any potential economic events that might affect its performance should also be noted. For example, a real estate stock might well be affected by a change in mortgage rates. If a trade goes bad because of an external event of that type, you will want to note it in your performance review.
4. If you are a technical trader, you will also want to note the candlestick setup on the trade, or if you are following a long-term strategy like a Fibonacci retracement. You may also wish to indicate if a moving average has been crossed, any stochastic indications, etc.
5. You will wish to note the trade management rules you are applying, including a list of all potential outcomes for the trade. You can indicate your expectations, and where you expected to be able to close the trade.
6.  Now enter as much detail about your emotions regarding the trade as you possibly can. Were you enthusiastic about the trade, or cautious? Anger over previous losses may have affected your decision to trade this stock, or possibly a feeling that the stock will move sharply higher or lower has gripped you.

Working with a high-quality journaling application, you can easily enter all these criteria, and then work with them in the comprehensive reports that the software generates. You can then perceive flaws in your trading strategy, and learn to do better.

Journaling can help traders of all stripes and sizes – anyone who regularly invests in equities can only benefit from the comprehensive analysis of trading habits and patterns that journaling enables.

But how do different kinds of traders use stock journaling?

Value traders. Value traders base their trades on what they consider a company is worth, and whether the stock price for that value is an accurate representation. Also called fundamentals traders, Warren Buffett is the most famous of this type. When, for example, the stock price of a company is too low to represent the real value of the company, it becomes a likely buy for this kind of trader, who must still take careful account of market conditions.

Journaling offers a valuable tool to this kind of trader, because it shows them if they have in fact done solid research. Was the company in fact undervalued? If not, the investor can see what factor was neglected in the analysis. The investor can also see in the journal if the understanding of overall market sentiment was correct, and, if not, when the market is more likely to support a rise in this kind of stock?  Since value traders tend to hold stocks for a long time, it’s critical that they get the research right, and journaling gives them the support they need.

Growth Traders. A different type of stocks trader is one who bases his trades on the evaluation of a company’s future results and financial success.  Growth investors are not especially concerned with what a company is worth now, but rather look at what they will be worth several years down the line, using techniques like discounted cash flow to estimate future valuations. Peter Lynch is among the famous of this type of trader, who obviously tend to look to young companies with potential.

Again, journaling has a great deal to offer a growth trader, enabling tracking of a company along the growth path. Journaling can help determine if the initial research was on track, and how the evolution of the company’s stock price relates to its results. By comparing trades, the growth trader can also see which sectors are performing best and focus his stock picks on them.

Technical Traders. Traders who base their decisions on stock movements – where do stock prices hit resistance as they go up, where do they level off at the support floor when they go down, what patterns of up-and-down movement do they show? John Bollinger, the inventor of Bollinger bands (a way to measure price peaks and troughs) is a famous trader of this type.

Journaling offers rich opportunities for technical traders, because the technical analysis employed can be reviewed and retested easily. With the data on market conditions, a technical trader can see the type of analysis employed, and just how well it worked. The technical trader can also compare different types of strategies and see which ones performed well under what circumstances.

Journaling clearly offers a vast amount of resources to all kinds of traders. Journaling software can make it easy to do.

To get the full benefit of your stock trading journal, you need to put as much relevant information as you can. The rule at the start should be: More is better than less; as you develop your journaling, you will be able to hone in on what the most useful information is for your analysis, but at the start, include anything that you think might make a difference.

Of course, you aren’t prepared to write volumes, so we can drill down a bit on what data might work best for you.

Start with the basic what, when, where and how much, and make sure you are as accurate as possible. Indicate the size of the trade in money terms, but also in terms of amount of stock purchased at a given price, and indicate what percentage of outstanding stock it accounts for.

Now ask yourself why? What were all the reasons that induced you to buy or sell? You undoubtedly considered market conditions first, whether the overall trend is higher or lower or stable. You should nuance this with as much detail on market direction as possible.

Then there was a specific reason to act when you did. Perhaps a company announced that it has an important new product or service selling rapidly. Or an impressive earnings announcement that pushed the price higher. Or a major management change. Or simply a technical setup that shows the stock hitting the support floor, giving reason to expect a bounce higher.

This kind of information might include the evolution of the sector or industry. Is there new demand for the product or service? Or do you want to short the stock because of industrywide shortages, or because new technology is making life tough for the company?

Don’t neglect to write about your own logic when you make the trade. Did you notice something that you think others didn’t? Was this a straight-forward momentum trade, or did you link up a number of technical trends? Do you think investors are piling into the stock, or did the stock itself move in a way that makes you believe it’s headed higher or lower?

As you expand your journal, you will use these detailed entries to analyze the weak points in your strategy. You’ll first begin to perceive patterns in your trading, and then how certain combinations of circumstances show up again and again in losing trades. You may find that your strategy has some flaws in it, making you invest when conditions aren’t right?

Or perhaps you are letting your emotions get the better of you, allowing anger push you to make revenge trades for losses, or permitting greed to motivate you to close trades too late?

With high-quality journaling software, entering any data you think might be useful is easy. High-quality journaling software will generate customizable reports to provide you with clear comparative information, and its automatic tracking of your emotions while trading.

Psychologists agree that trading stocks puts heavy pressure on an individual’s emotional state, and controlling emotions can be one of the most important elements in successful trading.

Dr. Van Tharpe, one of the most notable experts on trading psychology, puts it this way: “Almost any emotion you have stored in your body can find some justification for expression through trading.  If you have anger, you can find lots of reason to be angry at the market or your broker or your computer or something.  And can you think of any better vehicle than the market about which to create fear or anger?  Of course not!  In fact, your interpretation of what is going on in the market is an excellent way to justify any feeling.”

One of the most typical novice trader emotional reactions is to get angry at the market when a trade goes wrong and to maintain it instead of cutting losses. The professional trader accepts when a trade goes bad, and closes it down before losing too much. That trader can use the experience to place another, more successful trade. But the novice trader often gets angry ‘when the market doesn’t perform properly’ and just leaves the bad trade in place in the hope that it will somehow come right. The result is almost always significant losses.

The Role Emotions Play

As another trading psychology expert, Dr. Gary Dayton, points out, traders oscillate between greed and fear. As a trade plays out, traders cannot help but feel fear that the market will not go their way. Or, traders begin to win and feel greed for more.

Greed and fear can affect trading in very negative ways. A too-fearful trader closes a trade down before it can achieve its full potential. A greedy trader allows a winning trade to continue too long after an exit would have been advisable.

Then the egotistical trader allows pride in strategy to blind him or her to the changing reality of the market.

Managing Emotions

There is nothing wrong with feeling emotions! We all feel great when a trade goes well, and we get frustrated and angry when the market doesn’t perform in the way we expect.

But no one, not even the greatest and most skilled traders, always wins. We all lose money in trading from time to time, and there are always times when the market doesn’t seem to perform according to our strategies.

The skilled trader, however, learns to separate feelings from analysis. The surest way to do this is to have a very clearly defined and well-developed strategy and to concentrate on its execution rather than on anger, fear, greed or pride.

To distance oneself from turbulent emotions in trading requires discipline and practice to analyze the changes in trending. Why did the trend that you identified at the start not play out? Was the resistance too strong for the trend to continue higher? Did the support floor not hold because of market events? Concentrate on what you know about the market, and, if necessary, look for market comment that might suggest an aspect that you overlooked.