Reasons Why You Should Have a Trading Journal
A trading journal is merely a log of all your trading activity. Typically, a journal provides a tool for any severe traders in need to evaluate themselves objectively. But of what significance is keeping a separate journal?
Well, you can ask the reasons to keep a journal because brokers provide real-time records for trades. Besides, the broker offers a record that keeps track of the buying power, profit and losses for every trade, and the margin usage.
However, even though the broker provides a record, keeping a journal is the first move for any trader to become profitable in the forex market. Here are some of the reasons why you should have a trading diary for both bad and good trades.
As time goes by, a journal will, at some time provide you with a perspective history. Apart from giving a summary of your trading activity, it also shows the condition of a trading account. Basically, it forms the database of a trader’s account.
Therefore, it provides an opportunity to get back in time and then determine the number of times you traded, the currency pairs that did the best, how successful every trade was, and even those frames that gave the best profit.
A journal will finally come good for you as it will help verify your method. It will help you realize how good your system is whenever you change the market conditions. Therefore, you’ll then have answers to some of the questions such as how your system is in any trendy market, the difference in the time frames.
Most folks may be thinking that a journal will contain only the actual trading records. However, it as well includes information on your plans for every trade. It’s a feature that will allow you to consider trades before taking them quickly.
It will help to determine every parameter to enter, the amount of risk you can receive, your profit target, and the manner to manage the process of trading itself.
Therefore, a journal is simply a way to record personal thoughts but in actual numbers as well as making them possible. They basically form the foundation of the planning method for trading.
Also, a trading journal helps to change your habit form being destructive to being a building. In the process of changing the plans to those that are building, high-level confidence is built. At that point now, you’ll not feel like it was random with the profitable trades.
Besides, the losses will seem to be planned, and hence you won’t suffer a loss as really being a loser.
In forex trading, confidence is everything, and once you win, then you’ll want to win again, but when you lose, fear and panic take over, which is risky. Therefore, a journal helps to gather the statistics to prepare planning to come out victorious.
Main Concepts of a Journal
It’s crystal clear that a trading journal is essential in forex. A journal is recommended to be set up in a way that it accomplishes two crucial concepts. The concepts include;
- It has to have a chronological columnar of all the trades that you’re able to total as well as aggregate to have a full record of your efforts. Depending on your abilities, you can employ an excel spreadsheet that does most of the work for you.
- There should also be a printout of the exact chart used in determining the trade, which indicates the entry-level, stop-loss level, and the potential profit level. Moreover, you need to mark the reasons for making the trading.
You should always note that trading methodologies or the system used should not be mixed. Keep each journal separate if you have several trading systems.
Confidence is needed in forex trading, and it will come once you’re aware of your system’s expectancy. Executing trades with fear or panic will most likely result in losses, which you’re definitely not after.
Therefore, your first trading habit should be making a journal that will then be crucial in your trades. Once you’ve made progress, you’ll then come to realize that trading journals are the real friends as well as best mentors.