A trader needs to learn all the time to improve the results. Some tools are designed to help with this task and a trading journal is one of them. In this article, I will explain the importance of using the journal.
- 1 What is the trading journal?
- 2 The importance of using the trading journal
- 3 3 tips on how to best use the trading journal
- 4 Final words
What is the trading journal?
In the trading journal, a trader keeps track of all past transactions he has made. It can be a notebook or an electronic file. The form is up to individual preferences. More important is to collect all the details about your trades.
What exactly should you note in the trading journal? For each transaction you have made write down the following:
- Was it a long or short position?
- What was the outcome of the trade?
- Why did you enter this particular trade?
- What tools did you use?
- How did you feel?
So, you need to note the asset’s name, the amount you have invested, trade direction, expiry time, the indicators, and strategy applied. Besides, there needs to be a place to describe the soft factors that occurred during trading such as an hour and what emotions accompanied you during a session. Maybe you were under stress, maybe you were tired or excited, or maybe calm and relaxed.
Feel free to write whatever information you want to add. This is your trading journal so it has to be tailor-made to your needs. For some, the above points will be enough. Others will prefer to include some extra details. I suggest you begin with the information mentioned here, and then you will see how it works for you. Your trading journal will change as you grow.
The importance of using the trading journal
It is indisputable that the trading journal is a very useful tool. Now, I am going to give you three reasons why it is so.
Keep the trading journal if you want to succeed at Olymp Trade
At the start, it can be very difficult to choose the right strategy, to know which indicators to use, or to manage your emotions. This is the beginning phase and it will pass. Every trader has been there. But to go beyond that stage faster, you will need the trading journal.
You have noted all the details about all past trades in the trading journal. Now, you should analyze information from there and draw some conclusions.
Check when your transactions end up with a profit. You will know, among others, what the best time of the day to trade is, which financial instrument suits you well or which strategies were successful.
Doing such studies will help you recognize what brings you profits and what brings you losses. After all, when trading, it’s very possible to lose your money. Continue to trade when it serves you and try to change or leave what does not function well.
You should use the trading journal in the Olymp Trade demo account first. This is a free account charged with virtual cash where you can practice without the risk of losing your money. Go to the live account when you will feel comfortable.
Keep the trading journal if you want help for constant success
You aim at constant money flow, obviously. But many things can come in the way. For example, distraction. Maybe you have been making profits for some time and now you have become too confident, too careless. Losing focus will most definitely bring you a failure. The remedy is the trading journal.
Keeping the records of all transactions will help you catch very fast the moment when something goes wrong. This way you can quickly make an analysis and change your behavior in the market.
It works the same way for other obstacles that may appear. You can, for instance, discover, that your strategy brings money only during a crisis in the market. Without a trading journal, you could think this is a good strategy and keep using it. But by reviewing the details about your past trades you will easily find out where the problem lies.
You will be greater than other traders with the trading journal
To be successful in trading, you must be better than other traders. The brokers are only mediators between you and them. The brokers take their share naturally, but the average payout they offer is based on the average payout that a regular trader makes.
So you need to be greater than others and writing the trading journal is the first step to achieve this goal. In fact, if you do have a trading journal you are already better than those who do not.
3 tips on how to best use the trading journal
It must represent your needs
For the best trading journal design, you have to know and understand yourself. When do you feel comfortable? In which field are you confident? What does release positive feelings? Answer the questions and start building your trading journal. Consider the following factors:
- How do you feel? We act differently under different circumstances. Some are more efficient under stress, others are not. You must observe yourself and understand how you react when you feel happy, sad, or hungry. Do not open transactions when your state of mind can affect your trading.
- What is your risk tolerance? Again, we are all different. Some prefer trading with a large money and high risk. Others would rather play safe. Acknowledge your tolerance of risk and build the trading journal accordingly.
- What is your winning approach? Your approach must be in harmony with your personality. If you want high profits, but less frequently, try opening a few positions for a bigger sum of money and accept occasional losses. If you like being always right, enter the trade for a small amount of money but with a high winning probability.
I believe that these few examples gave you a general view of why you ought to understand yourself. A personal trading journal must represent your needs or it will not function well.
It should be a tabular form
A tabular form is just easier to read. And a trading journal is something you want to analyze fast. So make it as short as possible.
You can, for example, use numbers in place of long sentences. You may prepare your own scale for measuring your mood. You may also use symbols for indicators you are using.
Whole paragraphs are hard to read and compare. You want to have all the data nicely organized so you can get the information you need just from one look at your table.
Make use of modern technology
You need to be fast to earn. This means you want to save time wherever possible. And you can save a lot of time using a spreadsheet.
Paper trading journals are also good. And maybe you are the type of person for which they will work even better than files on a computer. However, modern technology is worth considering because it makes many calculations for you. Thanks to that you will be able to make trading decisions much faster.
A trading journal is a tool that can help you on your way to success. It allows you to learn from your own mistakes, decide which asset and time work best for you, and in such a manner, it may help you to earn.
To make the most of the trading journal it should be made for your measure, it should have a form of a table and you should use modern technology to write it.
Design your personal trading journal. Keep it at all times and start winning trades with it. Do not forget about the Olymp Trade practice account where you can trade in a risk-free environment. Share any comments you have on this topic in the comments section down below.
Best of luck!
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