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Ultimate Guide to Trade Journals

I have mentioned this many times in previous blogs and will mention it again, maintaining a trading journal is one of the most important things a trader must do.

 

If you’d ask me what is the one thing that made sure I don’t repeat mistakes that eventually made my account grow drastically, then I’d give all credits to my trade journal.

 

In this blog post, I am going to discuss everything you need to know about trade journals, right from what it is, why should you have one, and what all should it consist of.

 

If you want to learn how I grew my account to over $200,000 by making fewer mistakes then read this blog post till the end do not skip any part.

Contents

What is a trade journal?

Types of trade journals

Which one should you use?

Why should you maintain a trade journal?

What should the trade journal consist of?

Do you maintain a trade journal?

 

 

Key Takeaways

i. A trade journal is a diary or a log to keep a record of all details of the trades.
ii. Two types - physical trade journals and digital trade journals.
iii. Trade journals allow traders to identify their mistakes and work on them.
iv. It is could contain details of entry, exit, stop loss, target, lots, psychology notes, screenshots of charts.

 

 

What is a trade journal?

 

What are trade journal

 

To put it in simple terms, a trading journal is a log or a diary where traders keep a record of their trades. They enter every detail of their trade in the journals.

 

Traders look to record their entry, exit, stop loss price levels, the instrument they traded, time of the trade, etc. A trade journal is different from the trade reports that forex brokers provide, even though they have similar contents.

 

Apart from these inputs, traders record several other pieces of information in their journals. I will discuss this in detail further.

 

 

Types of trade journals

Trade journals are immensely subjective. Different traders will have different information recorded in their journals.

 

But based on the mode in which information is recorded in the trade journals, these are mainly of two types.

 

1. Physical trade journal

 

physical trade journal

 

Just as the name suggests, these journals are actual books or diaries consisting of pages on which traders manually enter every detail of the trades they have taken.

 

Physical trade journals are most common among traders as all that is required is a book and a pen.

 

Now some traders choose to go fancy and get hold of some fancy journals rather than journaling on a normal basic book, you don’t necessarily have to do that.

 

If you can get hold of such journals or diaries and do not want to be basic then you can always do so.

 

It should be noted that the purpose of these journals is to be a record of the various information of the trades and is not a scrapbook that has to be fancy or decorated.

 

Keep things simple, enter all the necessary information in the journal, and analyze it thoroughly. I will get to this part further in the blog post.

 

 

2. Digital trade journal

 

digital trade journal

 

These kinds of trade journals are a step above the traditional trade journals or physical trade journals.

 

Digital trade journals are created on computers, this is the basic difference between the two types of trade journals.

 

Now, in these digital trade journals too, there are some types. Some traders look to record everything on offline platforms like excel. They will then apply statistics and try to quantify their results.

 

There are some online trade journals out there that are way more advanced. Traders just have to enter the inputs in these platforms and the software works on its own to provide the metrics.

 

This would help traders judge their results better and make the necessary changes. Examples of such trade journals are TraderSync, Tradervue, Trademetria, etc.

 

 

Which one should you use?

 

physical trade journal or digital trade journal - the better one to use

 

I have mentioned basic trade journals and some quite advanced ones, so which one should you use as your own trade journal? It depends.

 

I personally use physical diaries to record information about my trades. I maintain these journals diligently and enter every necessary information.

 

Now, I like physical journals more than digital ones, but you might not feel the same. It all boils down to individual preferences.

 

But yes one thing I would suggest that, if you are a beginner trader then maintain a physical trade journal and write down all the information of your trades in them.

 

If you start putting in the work from the beginning itself, it will become second nature. And once you make progress in your trading journal and are no more beginners, you can always choose to make use of the digital trade journals.

 

I have seen some really advanced traders use digital trade journals, as they prefer having quantified metrics of their trades and I have also seen advanced traders using a normal book to keep a record. Try out both and determine what works for you best.

 

 

Why should you maintain a trade journal?

 

reason to maintain trade journal

 

Now that you have some idea about what a trade journal is, you might have a question lingering in your head as to what is the purpose of a trade journal and why spend the time and effort just to keep track.

 

On the face of it, keeping track of your trades might not seem much important. But if you actually think about it then it could be the key to success in your trading journey.

 

Most traders only judge their trading journey through the results and these results are mostly monetary returns.

 

The traders that do so are mostly the beginner ones that keep money at the highest pedestal and do not think beyond monetary returns in trading. But for seasoned and experienced traders, progress is determined differently.

 

These types of traders know that their strategy will have positive and negative phases as the market conditions change, they acknowledge the fact that they will not profit every time.

 

In such cases, they judge their results on the basis of the mistakes they made, whether they stuck to their plan, whether they managed risk properly, whether they acted out of emotions or stayed analytical.

 

Once a trade is over, how will a trader remember all the information of the trade? Through a trade journal.

 

The main purpose of a trade journal is to have a record of all past actions for scrutiny in the future.

 

Everything that the trader mentions and records in the journal can be analyzed in the future and in this way, they can understand what aspect they must work on and what needs improvement.

 

It is often said that you know you have progressed only when you are better than what you were in the past when your present actions are better than your actions in the past.

 

And the best way to know if you are better now than you were in the past, is by keeping track of everything you did and then analyzing it thoroughly.

 

Trade journals have a large share of advantages for traders and are not just limited to spotting mistakes committed over time.

 

If you maintain a trade journal you can identify your winning strategies and other variables that are either costing you or are benefiting you. You can then act on it accordingly.

 

By this traders can identify how to maximize profits and minimize losses, and by doing so, they can bring about serious positive changes in their trading results.

 

Trade journals also tend to keep traders on track of consistency. This happens as traders are accountable to themselves through the journal.

 

 

What should the trade journal consist of?

 

what the trade journal must have

 

I believe that you now acknowledge the importance of the trade journals and that you will decide to maintain one. Now let’s discuss what should you look to the record in the trade journal.

 

The most basic information that traders record in the journals is that of the asset they traded, the entry price, stop loss price, exit price, target price, position size, and time of the trade.

 

Every trade journal entry must have this, but should not be just this. There are some more important pieces of information that must be included.

 

Traders must record their reason for the trade. It could be a rules-based strategy or some trade taken at discretion.

 

It is even advised that traders jot down their emotions and psychology before taking the trade, during the trade is open, and after the trade is closed.

 

This will give them serious insights as to their behaviors and whether they are overly emotional or are analytical in their approach towards the trades.

 

Some traders take things to the next level by recording everything that they see, any particular pattern forming, and how they identified and reacted to them.

 

You can also have pictures of charts attached in your trade journal. Have pictures of charts before the trade and after the trade.

 

Once you analyze things, you can understand how the price moved after you initiated the trade.

 

 

Do you maintain a trade journal?

I hope that you now acknowledge and understand the importance and the value a trade journal holds and that this blog post pushes you to actually start maintaining one for yourself.

 

If you already maintain a trade journal do let me know what all you record in it and whether it is a physical one or digital.

 

Don’t forget to share this blog post with traders and help get better results by making them have a trade journal.

 

You can always shoot your questions or queries in the comments section below and I will get back to it at the earliest.

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