The trading journal helps traders track their trades and thoughts throughout the day. It is a great tool because the comprehensive journal includes details beyond what you can see in your trading brokerage account statement. It includes whether market conditions are good and whether you got distracted or made mistakes. It is also the place where you can record any strategic ideas that may arise during trading throughout the day.
The Easy Way
A picture is worth a thousand words. Instead of writing about market conditions, mistakes, what is going well, and new strategic ideas, take a screenshot of the trading day with some written comments on it.
Most traders mark their charts throughout the day, drawing lines and placing indicator levels that help them identify trend directions and find potential reversal or target points. The chart illustrates the precise market conditions in which you are trading. The internal analyses can demonstrate your perception of the market on that day – something that words in the trading journal cannot describe as effectively.
A picture is an easy way to maintain a trading journal, but it should include certain elements to make it useful when reviewing it later.
How to Mark Charts
Here are the basic guidelines for marking your charts to make them useful for future review:
- Include an hour or two of price movement before the trading starts, if possible, to provide context for what was happening when you began trading. You don’t need to include price movement from the previous day. This can help you assess which time frames to watch while trading.
- Mark the time you start trading with a vertical line or a textual note on the chart. This tells you whether you started trading early or late, and why you may have missed some trading signals earlier in the day.
- Write down the times of major economic events from which you’ll stay away. When that time comes, remind yourself again that you weren’t trading due to the news.
- Throughout the day, add textual notes about the trends and market conditions you observe. If you make a mistake, document it. If you miss a trade, note it down. Keep as many trend lines and drawings on your chart as long as they don’t distract you. These marks will help you show yourself in the future how you were viewing the market in real-time at any given moment.
- Mark when you stop trading for the day with a vertical line or a textual note. Write down the number of trades you made, how many were winning, the total profit from winning trades, how many were losing, the total loss from losing trades, and the net result. Avoid using dollar amounts, which change based on position size. Instead, use pips for forex, cents for stocks, or ticks/pips for futures. For instance, if you were trading an ES futures contract, instead of writing “4 winners, $400; 4 losers, $200 = net +$200”, write “4 winners, 8 ticks; 4 losers, 4 ticks = net +4 ticks”.
- At the end of the trading day, take a screenshot of your chart and paste it into a photo editor. It should include all the above-mentioned information. If you cannot see everything on one chart, take two or three screenshots and save them separately.
- Save each day with a date in the file name and keep it in a trading folder located in an easily accessible area on your computer or in the cloud. Create subfolders for each year and month to make the files easier to search.
Review
Your Journal
At the end of each week and month, I go back to what I did, note common problems, and discover your strengths. This feedback can help you leverage your strengths and highlight the areas you need to work on.
Taking screenshots is more effective in capturing information than just writing in a journal. If you wish to write, you can do so directly on your charts or also keep a written trading journal. Be diligent in this routine until every trade you make is recorded.
Frequently Asked Questions (FAQs)
How to create a trading journal?
You have several options on how to create and maintain your trading journal. If you want to include screenshots, you’ll find it easier to use an electronic writing method. You can use a note-taking app on your phone, a cloud-based document service like Google Docs, or spreadsheet software. Spreadsheet programs can be particularly useful, as you can include cell formulas that quickly calculate your profit or loss. There are also services (like Tradervue) you can use that are aimed at helping traders keep effective journals.
What should be included in a trading journal?
At a minimum, your trading journal should include daily profit or loss and some notes on broader market conditions. You should aim to include more information. Any thought that comes to your mind about why you entered a trade, why it succeeded, or why it failed will be useful for later review. Details about precise entry and exit points can help you form better trades to adjust your strategy. In general, the more information you include, the more insight you will gain into which trading strategies work and which do not.
Source: https://www.thebalancemoney.com/how-to-keep-a-trading-journal-the-easy-way-and-why-1031236
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