Trading Journal – Introduction

We don’t know of a single successful trader that doesn’t keep a trading journal.

There is a reason why successful businesses keep detailed records! They use the data to analyze and optimize their operations!

Trading is no different. The most important thing that you can do to cut your learning curve is to treat it like a business and keep a detailed trading journal.

Many struggling traders don’t keep journals, let alone know what they are!

Why might this be the case?

Put it this way.

Digging into your emotions pre, during and after trades will unlock incredible insight into your strengths and weaknesses.

This will help you optimize your strategy and identify areas to work on for improvement. That is how successful traders operate!

Many losing traders jump between strategies looking for the holy grail. We believe that a trading journal IS the holy grail!

In this post, we’ll break down the process of keeping a trading journal so that you can unlock your true trading potential!

Trading Journal – What to Track?

By tracking it you can master it. Remember that!

Most traders stick to the basic metrics when creating trading journals.

These can include entry, exits, position size, as well as net profit & loss.

While this is a good start, we want to go deeper than just the P/L from your broker statement.

We also want to track the factors that can affect trading performance such as emotions, market sentiment & analysis, as well as trade qualifiers/disqualifiers.

What Do We Track?

Since we are day traders, we keep a trading journal for every single session, whether we traded or not. Swing traders will benefit from tracking each trade, before, during and after execution.

The relevant metrics that we like to use for our trading journal are as follow:

(1) Asset traded

(2) Position size used

(3) Whether we went long or short & why

(4) Strategy used to execute trade

(5) Time and date of trade

(6) Entry Price

(7) Exit Price

(8) Final P/L Result

(8) Screenshots of the trades

(9) Notes with regards to why we took/disqualified the trades

(10) Session and/or Trade Grading

Trading Journal – How to review and optimize your edge

If you keep disciplined and consistently update your trading journal, then you should have a nice set of data to review. Here is what to look for in order to optimize your edge and improve your trading results!

  1. Identify patterns that may be leading to losers and find ways to minimize/mitigate them.
  2. Identify patterns that lead to your winners and find ways to maximize your profits.

Let me explain…

Losing trades are part and parcel of this business, however, not every loss is the same! For each loss that you take, you want to make sure that it was a valid setup in the first place.

Ask yourself, “How can I minimize my losses”? If you find that you tend to perform the worst on a certain date of the week, you might consider not trading it moving forward. What if you find that you are getting the direction right, but getting stopped out of trades before the real move happens far too often? Perhaps you are getting in too early and can add a filter to reduce your losses.

Your winning trades are just as important for your development as the losers. Sometimes we get rewarded for breaking our rules, so you’ll want to review each winning trade to ensure it was a valid setup in the first place. If the profit was a result of a mistake or rule-breaking, make a note of it. You’ll want to look for patterns that lead to your winning trades. Is there a certain setup you should focus on? Are there days you seem to perform best? Are there times of day that you trade the best during? These are all things that should be noted and review on a continuous basis.

After reviewing your winners, ask yourself “how can I maximize my profits on my winners?”. Whether it’s scaling out of a portion of the position to lock in profit and letting the rest run or utilizing a more effective way of manually trailing your stops, this should be a big focus during your review.

If you can do these things successfully, you will be well on your way to becoming the best trader that you can be! Is it starting to make sense why a trading journal is so crucial to your development?

Trading Journal – Free Tools

Evernote

With a free and paid version, this is our preferred tool for keeping our trading journal. The free version allows a monthly upload limit of 60 MB and should suffice for most new traders. You can take screenshots directly into the notes, annotate images, create notebooks and tag notes making it easy to keep a detailed journal.

Google Docs

Another free tool that can be accessed with a Gmail email address. A great alternative to Evernote which can be used to write down thoughts and analysis of the markets.

Windows Snipping Tool/Mac Screenshot Tool

If your trading platform does not offer the option to copy charts directly from the platform, then this is a great option to get screenshots of your charts into your trading journal.

Microsoft Paint

Another free image editing tool out of Microsoft which you can use to edit and annotate your charts as needed.

Trading Journal – The Full Process

By now you should understand the importance of keeping a trading journal, as well as, the metrics to track and how to review and optimize your performance going forward.

If there is still any confusion, have no fear! We made this video to walk you through the complete process of creating a trading journal which puts together all of the concepts introduced above.

Grab a coffee or a beverage of choice and enjoy the video!

Trading Journal – Final Thoughts

A trading journal is a deciding factor between the 5% of traders that are consistently profitable and the 95% that lose money.

Keeping a diary of your trading activity will help you review your results, weed out any weaknesses and highlight your strengths. Which in effect will help you optimize your strategy, increase performance and maximize profits!

If you don’t already, make sure to start keeping a trading journal as soon as possible and see the benefits that it can provide for your trading!

If you want to join us in our live trading room, check out the Pro Trader package here >

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The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.