Trading Journal: All a Trader Should Know

This is a guide for traders on how to keep Trading Journal correctly. If you are already a trader, if you’re just planning to become a trader, or you are just interested in trading – in any case, this information will be useful for you!

In all books about trading, the authors write that traders have to keep a Trading Journal. All the financial markets guru also affirm that every trader has to keep such a journal, and this is the only way to get to a stable income on the financial markets.

Every beginner trader, who doesn’t have a stable income on the financial markets, can understand that keeping a trading journal will be very useful for him. But according to my practice, only 2 or 3 traders from hundred write down their trading deals.

In the best case scenario, only one of those 2 or 3 traders keeps his/her Trading Journal correctly! And no one of those who write down their deals analyses them.

But every single trader knows it for sure that keeping a Trading Journal is necessary.

But why is it so?

This is just because nobody explains to us how to write it down correctly – neither in books nor on webinars. How to write it, what to note about those deals, nobody tells!

Can you imagine the beginner trader, who just started his way at Forex market without stable financial income? Maybe you can recollect yourself?

So he takes a paper and a pen and tries to write down something, and goes crazy because he just has no idea of what to write.

Where to begin? How to write? What details to note? Where to describe all of it? How to analyze? That is a huge problem!

So, the situation is similar among those who are reading it now… You’re taking a paper and a pen and you have no idea what to write.

So, let’s take some steps on how to keep your Trading Journal!

1. Date of the deal
2. Type of the deal (order)
3. The idea of your deal (why did you open this order)
4. How did you close your order
5. Result of the deal
6. Transaction analysis

1. Date of the Deal

The very first thing you are to note is the date when you opened your deal. This thing doesn’t need explanation. Just look on the date and note it.

2. Type of the Deal

The next thing you should note in your Trading Journal is the type of your deal. For example: this is a BUY order on EUR\USD, buying price, Take Profit and Stop Loss. This is the data you need to note.

3. The Idea of your Deal

Here you have to describe the reason that made you open this order.

You need to give an answer to the question: “Why did I open this order?”. The main thing is WHY!

For example, you opened an order because there was an uptrend in the market. Or vice versa – we sell, because there is an uptrend, but we rest against the resistance lines.

Or we buy. But why at this very price? Because there is a support level, or because there is 38.2 on Fibonacci (Fibonacci retracement – Wikipedia) from the last growth, or RSI (Relative strength index – Wikipedia) tells us to open a position.

Just try to note as many arguments as it is possible on this deal. If you don’t have such arguments – maybe this deal is premature, maybe you are in a hurry? Maybe this deal isn’t worth being opened?

You will notice that it is possible to exclude a big quantity of needless deals at this stage. So, you will reduce the LOSS deals.

4. How Did You Close Your Order

The next necessary thing for you to note is how you closed that deal. Was it Take Profit or Stop Loss? Or you closed it yourself with zero profit. How much time passed until you made a decision to close it etc.

5. Result of the Deal

I think this is the most simple for you. You just need to note how many pips you won (or lost). Here is a thing you should pay attention to – a ratio between Drawdown and Profit.

It’s important: Profit has to be bigger than Drawdown during the time when the order was opened! Accordingly, the Profit value should be greater than the Stop Loss value.

6. Transaction Analysis

Analysis of the deal is an essential thing for you too. You don’t have to analyze the deal as soon as you close it. Let some time pass.

Analyze the deal after a week or two passed, or even at the end of the month. It is very easy to analyze whether this deal was successful or not.

Just look at the chart. For example, we opened a Sell order when there was an uptrend. So, you can write down something like “The deal wasn’t successful because it was opened against the market trend”. That’s all.

So, may every trader keep a Trading Journal! It helps us to understand the market better. It makes us more disciplined and responsible for our losses.

It’s up to you to decide how scrupulously you need to describe the deals. Just pay attention that your description has to be understandable for you after some time.

Don’t spend too much time on it. But your deals have to be analyzed.

By noting steps of your deals, you will screen out a lot of trades that could be unprofitable.

When you write down 10-20 deals, you will understand your mistakes. You will notice losing deals very easily. You will know the reasons of your losses.

You will be able to see the opportunity to increase your profits and to understand whether you open your deals impulsively or not.

And finally, you will notice whether you listen to somebody’s ideas or not, whether you follow your trading strategy or not.

Keep your Trading Journal and aspire to be a great trader!