Importance of Recording Historical Trade: Keeping a Trading Journal
Records serve as receipts for completed work! A historical record is a must-have for anyone embarking on their forex trading journey. It involves both the exciting and the not-so-exciting parts of your Forex journey.
Many a time, the thoughts of a trading journal don’t sound appealing to forex traders because they have probably heard the phrase “focus on your strengths, not your weaknesses.” Awesome! Nevertheless, the aim of a trading journal is not to focus on your weakness but to leverage your strength.
What is the importance of keeping a trading journal? Is keeping a trading journal worth it? How detailed does my trading journal have to be? These and many more questions on recording historical trades and keeping a trading journal will be brought to light in this article.
What is a trading journal?
A trading journal is oftentimes referred to as a trading diary. Instinctively, anytime you see a trading journal or diary, what comes to your mind is “Dear diary, I had an awesome moment trading today; I hope all goes well tomorrow also!” Some will even go as far as giving their journal or diary a name.
Literally, every forex trader has at one point or another thought this is what a typical trading journal or diary is like, but it isn’t exactly like this. Grab some pop-corn if you haven’t got one yet as we journey into what a trading journal is really like.
A trading journal is a log of all trading activities. It contains all information concerning the execution of each trade. Keeping track of your trades can be time-consuming and may not be the most exciting aspect of trading, but it is important if you want to improve your trading performance. A trading journal describes how the trader or system performed in the current market.
Is keeping a trading journal worth it?
Tracking your trades is crucial, not only in terms of the “mechanical” data (entry, targets, stops, exits, etc.), but also in terms of the “intrinsic” data, i.e., the emotional responses, thoughts, and other direct observations accompanying each activity.
Although keeping a trading journal is time-consuming, you will be pretty astounded at how it will give you a clearer focus. Keeping a trading journal is worth it because you will be able to keep an eye on both the effectiveness of your trading strategy and your capacity to use it consistently.
How detailed should my trading journal be?
It is suggested that your journal include all the details you require to accurately evaluate what you are doing well and what needs improvement.
You can be as concise as possible and write anything that needs to be considered to influence your trading decisions or results. Write down everything, including your strengths and weaknesses, even the emotions you experienced while carrying out the trade.
Moreover, you should keep in mind that you’re not writing a blog post or a novel; rather, you’re writing something in your area of interest and skill training.
For every trader, a trading journal is a very important part of trading. The aspect of keeping a trading journal is a personal experience that cannot be taught by a trainer, an author, or even in a seminar. One of the keys to becoming an efficient trader is gaining this experience!
Importance of Keeping a Trading Journal
Below are the importance of keeping a trading journal:
- It helps to pinpoint strengths and weaknesses:
A trading journal provides you with an opportunity to leverage your strengths and weaknesses by using records. It is worthy of note that records and previously successful strategies are not a surety for future performances and positive results. However, a trading journal helps you to re-strategize, and it places you on the path to efficiency in your trading journey.
Every Forex trader is vulnerable to emotional influence. The goal of a trading journal is to oppose emotional influence with logic and reasoning. Keeping a trading journal will keep you accountable and also act as a means to justify every deal you make.
- Growth tracking:
Keeping a trading journal serves as a means to track your growth step-by-step. As much as a forex trader wants to focus on the end goal, it is also very important to appreciate each process and step. A trading journal will help you see the beauty in each step while analyzing your growth along the way.
- Goal setting:
A trading journal serves as a foundation for setting SMART (Specific, Measurable, Attainable, Relevant, Time-bound) goals. It is commonly stated that goalies score goals! A trading journal will help you avoid mounting unnecessary pressure on yourself and set achievable goals.
- Historical records:
A trading journal potentially offers a historical perspective. It will not only outline all of your trades, but it will also give you a view of the state of your trading account. A trading journal serves as your measurable performance database, allowing you to track:
- How frequently do you trade?
- How profitable each trade was
- The currency pairs that did better for you
- The time frames that gave up the highest profit margins
- and lots more.
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Consider keeping a trading journal for each of your trades and actions on your trading account. See it as your scoreboard, where you can track your strengths and strategies.
Also, see it as an avenue to examine your weaknesses and strategies to make room for improvements. As promised earlier, we hope you enjoyed this article. Which section do you find most juiced with information? Would you want more of this? Your reply in the comment section below will be highly appreciated! Thank you.