​Journals are easy to set up and once in the habit of keeping details after each trade, the rewards may quickly become evident. Logging trades with details about how and why trades were executed is not the same as the transaction history which can be found on the broker platforms, showing entry and exit levels with what the profit and loss.

Tracking progress and keeping focused finds ways to better the performance. It is similar to keeping gym progress with the weights used last, how many reps were done and what exercise it was. The process helps develop better methods and consistency via discipline. Anything which relies heavily on psychology, goal setting and risk management requires a top level of information storing.

 

What a journal aims to achieve

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Trade journals help manage individual psychology and master mindset before, during and after a trade. Second guessing decisions can come from being unsure of the trading plan, whether it is due to outside noise, news or instinct. A journal includes a note explaining why the trade was entered and how the trader feels when entering the trade. It will soon be evident which methods work more than others.

 

• Recognise progress. This is important as it will help show how trades are being decided and how much profit or loss is being taken after each trade. 

• Helps distance emotion from trading. This is one of the hardest tasks for both new and experienced traders. Leaving emotion at the door and not letting losses or other influences mentally affect the trading decisions.

• Journal are like coaches, showing what works and what doesn’t. It can be said that a traders experience and ability to review their own trades is more beneficial than just reading several books on how to trade.

 

 

What to put in the trading journal

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The more detailed and easy to understand the journal, the greater the benefit. They are personalised to suit the individual. Some of the main items which feature in a trade journal are:

Initial goals, why you are trading and what is hoped to be achieved

• What are the goals and motivations for starting forex trading (this should not be to pay bills that you can’t currently afford – don’t put undue stress and pressure on the role of trading).

The basic trade information (the information the broker platform can also tell you)

• Currency pair, current price level, entry price level, position size, stop loss level, exit price, time & date, profit & loss, etc.

• Record this to determine statistics from the trading journal. 

• What is the overall profit or loss of my trading?

• What proportion of my trades were winners, and what proportion was losers?

• How many pips & how much profit was the largest winning trade as well as the largest losing trade? (Largest pips and largest profit could come from two different trades depending on position size)

• What is the most number of wins in a row and the most number of losses in a row?

• Common averages: risk-to-reward ratio average, average winning size, average losing size, etc.

Emotional descriptions (how you feel)

• What was the gut feeling before, during and after trades? Did it feel confident, uneasy, unsure or just taking a one off punt? Familiarise how the mindset reacts to certain situations and improve for next time.

Market technical analysis (what is the market showing)

• What was the trigger to enter into the trade? What were the indicators and patterns which ultimately showed a good entry point into the market? Are there specific reasons which resulted in a trade? This is done pre-trade execution.

What adjustments were made throughout the trade?

• Was the entire trade pre-planned with stops and profit taking levels or did adjustments need to be made? Was there a chance to monitor the trade and make necessary changes such as trailing the stop loss to lock in profits, closing out parts of the trade and was the trade outcome as expected?

Market sentiment (examining over market sentiment and movements)

• What is the overall feeling of the market? Is there a trend developing with rising positivity or otherwise?

Errors (what mistakes were made)

• Always report what errors were made with trade decisions. These should include wrong direction trades, keeping a trade open for too long, closing a trade too early or using position sizes too big or too small which affected the profitability of the trade

Risk management rules used

• What were the overall rules used. This can include a certain percentage of risk, how the trade was entered and exited with risk-to-reward goals or any other important risk management rules set prior to entering the market.

 

Journals should suit the trader. Make the process easier and set up a template. Several journals are available online with a significant amount of information to record.

It is rewarding to see what has developed and review past psychology, mentality, risk management and logic used. By doing this we learn from the past and develop ourselves to becoming better market athletes.

Keep track of what works to generate the most profit and what is causing the most losses. By determining the answer to those two questions, consistent growth is more likely!