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What is a Trading Journal and How to Keep One

Steve Miley trader
Updated 1 Jul 2022

All progress in life can be traced by looking at the history of a set of actions. When it comes to wanting to learn how to trade forex, CFDs or any of the markets, it is vital to know that progress is the key to successful trading. Tracking your successes and mistakes is much easier by keeping a trading journal.

What Is a Trading Journal

What Is a Trading Journal

It’s a place where you record your trades and decision, along with any related analysis and additional notes. Keeping a trading journal is one of the best ways to track not only successes but also failures. By noting all trade actions and outcomes, you will be able to grow as a trader and learn from any mistakes.

Steps for Keeping a Successful Trading Journal

  1. Analysing and Upgrading Your Trade Strategies
  2. Avoiding Overtrading
  3. Analysing Trading Platform Account History
  4. Keeping Additional Trading Journal Notes

Analysing and Upgrading Your Trade Strategies

It should be no secret that solid trading strategies are vital for successful results. It is especially important that traders use a variety of strategies, as no single strategy applies to every trade situation or market condition. In order for these strategies to be successful, they need to be reviewed and adjusted as they are tested.

By noting each strategy and when it was used, you can track the outcome, analyze any mistakes, and upgrade the strategy for future trades.

It is also beneficial to test several theories and write down each step of the thought and action process. When you neglect to track your strategy implementation and its results, you run the risk of missing many learning opportunities. In turn, your risks become larger and profit is at stake.

Avoiding Overtrading

Certain strategies, such as scalping, make use of as many as 40 signals per day with multiple positions open. However, this is not common with most normal strategies. If you review your trades and notice a consistent trend of 10 to 15 trades each day, you can classify it as overtrading. Having that many trades open each day deters you from focusing on individual trades and detailed analysis of the market. By checking your trade amounts in a journal over a period of time, you will clearly see whether or not you are overtrading.

Analysing Trading Platform Account History

Factors such as trade types, trade size, traded currency pairs, and opening and closing times should be noted in a trade journal. This can show your personal trade statistics and averages, allowing you to track performance as it happens. This will also allow you to determine which currency pairs are more successful and reveal whether you are better at trading in calm market conditions or volatile conditions. Because the markets depend heavily on time, you can also track which times best suit your trading preferences.

Keeping Additional Trading Journal Notes

Additional notes are essential to the understanding of each process. By noting the reasons behind certain choices or changes that occurred, it will be easier to spot trends when reviewing your trade history. Any additional information will only prove beneficial when it comes to improving your strategies.

Keeping a trading journal is as simple as it sounds. It can be done physically in a book, as an online document, or even in an Excel spreadsheet. The key information you’ll want to add includes:

  • Date and day of the week
  • Time the trade is opened and closed
  • Currency pair
  • Entry price
  • Stop loss price
  • Take profit price
  • Closing price
  • Position size
  • Strategy
  • Trade type
  • Profit/loss
  • Extra notes

Once you have kept track of your trades over a period of several weeks or more, it is important to review your trading journal entries. This will allow you to learn which moves were beneficial and which were mistakes and determine how you can improve future trades.

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.