Making A Trading Journal Work For You

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.