A trading journal benefits a trader or any user in several ways. You can outrun poor trading systems by maintaining a trading journal and analyzing it. A trading journal will help you to supervise every decision you make, and informed amendments can be made to improve your methodology. This is a self-reflective journal where you can easily carry out self-assessment.
However, we must note that a trading journal is good only if its inputs are authentic, systemized, and honest. What you put in will reflect the quality of your analysis. Hence it is extremely crucial to know how to maintain a trading journal.
What is a Trading Journal?
We are all familiar with the concept of holding a diary or a journal. A diary is where we store our important events, significant dates, people and most importantly, a diary where we self-reflect. This is all we will do for a trading journal as well.
A trading journal is where one keeps a log of all their trading activities and their pre and post-trading activities too. In very simple terms, you will keep a record of everything you did before making your trade, during the trade, and after your trade.
How to Maintain a Trading Journal?
- Start with the Date & Time
Always begin your journal with the date. Knowing when you placed your trade and when you exited a trade is necessary. This information will be crucial to our analysis, so do not neglect to jot them down.
- Trade Instrument
There are several financial instruments one can trade with. Always be sure to note down what you traded. Trading instruments could be bonds, stocks, mutual funds, commodity futures, or any other derivatives. In addition, you may also include the market or sector you traded in. All of this will add significant value to your analysis.
- Entry & Exit Price
In this section, you must enter the price you entered and the price you left with. You can note down everything that happened in between. If you applied a stop loss, write it down and also elaborate on why you chose a specific stop loss. Mention the amount of profit or loss you made too.
- Every Market Decision
We all do know that the market is dynamic and unpredictable. We may make several educated guesses, but no one can guarantee the direction of a stock or any derivatives. The rapid changes in the market call for rapid decision-making and each of these decisions impacts our trade.
Make a note of every decision you take and also write down how it affected your capital. Do not shy away from writing down decisions you made that caused a financial loss. Jot down everything, as this is key to quality self-assessment.
- Market Observations
What did you notice about the market on a respective day? Any new insights you receive can also be included in your journal, which can be used for future reference. If there was a pattern you observed, then write about it and state your analysis of it. Include data in your journal. Feel free to add screenshots if you are using a digital trading journal.
What became of your trade? Did your trade move in your direction and benefit you, or did it move against your direction? Did you make a profit, or did you end up in a loss? This is certainly a mandatory section to maintain a trading journal. Write down how every decision you made impacted your trade.
A key element to maintaining your trading journal is your emotions. Write down what you felt throughout the trade, why you felt certain things and how you responded to those emotions. Trading can be extremely stressful, and many individuals experience varied emotions throughout the trade. Attend to those emotions. Do not think certain emotions are silly or they need not be written down. DO justice to your journal by adding in all information.
None of these elements will add value to your trading journal if you aren’t honest about it. Do not shy away from writing down your mistakes or your losses. Always remember that this journal is yours, and it is personal to you. And the only way you can benefit from it is by being honest about it. Honesty is key to your reflection.
After a few weeks or months, you will notice a pattern in your own journal. You will start to pick up elements that you might have missed during the trade. Always revisit your journal. It is as important as writing them down.
Several platforms offer many trading journal features that can be used to maintain your trading journal. They already have inbuilt categories that will help you maintain a systemized journal for your analysis. So, explore and experience the benefits of these features.
If you wish to maintain a trading journal immediately, then you may explore Stolo’s trading journal feature. This inbuilt feature in Stolo will help you maintain your trade logs and aid your trading all in one place
To know more about Trading Journals and their benefits, read our article: What is a Trading Journal? 6 Benefits of Using a Trading Journal