As a beginner in trading, a trading journal plays an important role in the trading plans. I am certain that professional traders started by making journals for their trading journey. Newbies in trading should understand that without trading journals, you easily get lose track of your winning and losing positions. This is also important in tracking your progress and identify your mistakes made when entering and exiting a trade. Future trades, existing positions, and any emotions that may jump are important factors to be considered in building an effective trading strategy.
What is Trading Journal?
A trading journal is where you recorded everything you do as a trader - trading strategy, risk management, psychology, and other things involved in your trading journey. A trading journal is an effective tool for performance management that can be helpful for better output and as a future reference.
Why make a trading journal?
It keeps you accountable.
It builds a careful framework when analyzing potential trades.
It determines your strengths and weaknesses.
It manages your emotional triggers.
It helps you become more profitable.
It encourages performance-driven growth
You can become a successful trader by creating and using a trading journal correctly, regardless of how the market moves.
How to create a trading journal?
You can create your trading journal in different formats that fit your style and needs. There are also free trading journal templates you can find online, just search about it.
You can use Microsoft Excel, Google Sheets, and a written document like Google Docs or Microsoft Word in creating a trading journal spreadsheet. You can use these to record your trades and thoughts. Then you need to know what things to include in your trading journal. It should have a column related to each trade and that includes:
Entry date
Exit date
Symbol
Direction (long/short)
Entry price
Position size
Notional value
Stop loss
Take profit
Exit price
Trading fees
Profit/Loss (P&L)
Profit/Loss percentage (P&L %)
Notes
Creating a trading journal is easy, but knowing how to use it is something you need to practice. But as long as you understand the fundamentals, you will be able to use it like a pro at no time.
How to use a Trading Journal?
It is another thing to know how to implement what you learn from your trading journal into your trading system. Before you start trading, you need to set your reasons for doing so. And that is what you will compose in your written document. It is also where you will write all the thoughts and ideas that will be popping up in your mind as well as your emotions. You have to write all your thoughts and emotions so you can spot your strengths and weaknesses. Whether your certain idea is helpful or not, or if your emotions could help or hinder your trading performance.
In your written document, it is where a trader exert their creativity while their spreadsheet measures the profitability of their creativity.
After finishing your written document, it's time to create your spreadsheet.
Your spreadsheet is more like a logical space where you will be recording all your trades, so it is vital to keep it organized and updated. Your trading journal will help you measure your successes and failures and will help you determine whether the ideas in your written document are valuable or not.
As a newbie in trading, we often fail to stay in the trade, we fail to trade the plan, and most especially, we fail to turn away our emotions from our trading!
If you keep that kind of trading and don't have a trading journal, you will not notice that your portfolio is already plummeting.
Becoming a successful trader can be a very difficult undertaking. Traders not only analyze each particular trade, but also the progress of their trading performance. By creating an effective trading journal, you will be able to spot the market trends and patterns effectively and become a more disciplined and profitable trader. By taking advantage of this tool, you can thoroughly keep track of your progress and skills, emotional triggers, and other aspects of trading you want to assess and optimize.
Source:
https://academy.binance.com/en/articles/what-is-a-trading-journal-and-how-to-use-one
I hope you learn something new about trading today. By the way, it's the first day of December. Advance Merry Christmas everyone!
Written by: @Jane
