A trading journal is a place to keep a record of a trader. Every traders maintains a specific business notebook to keep up the track records of their investments. Later, they look at the journal to research their space of improvements or what mistakes they have made. They are essential to make a firm place in Forex.
Uses of Trading Journal
There are lots of reasons why you should keep a trading journal. Here is some,
- To find mistakes.
- The amount of money is spending.
- To identify Swing high. Swing low range.
- To improve strategy.
- To make an instinct about the trending market.
- To keep records of consistency in trading.
How you can create a Trading Journal
The traders can use different approach to record the details of trades in the journal. We will be discussing the most used and efficient way of maintaining a business notebook.
- Use excels or spreadsheet to store information. Using a notebook will be an old-fashioned thing.
- Try to find what sort of thing should be recorded.
- Identify the stop-loss and profit margin after finishing a trade.
- Evaluate that data on a day/week or month basis to be more specific about the next step.
- Point out the swing-high, swing-low range after a long time (week/month) of investment.
- Write down the pip value lot after transection.
Point 1: Choosing a spreadsheet or notebook
The spreadsheet has much built-in functionality, which will be helpful to analyze data efficiently. We will see that in point no 6. We can also detect or mark the places we want to have a more specific look.
Point 2: which information should you record?
In the Forex trading business, some key terms should be kept as a record to know about investment fully. These are –
- Trading instrument
- Lot size
- Date of investment
- Stop loss and take profit
The primary purpose is that the record should reflect the current scenario at the depth level. You can easily find out the leaks of investment. You can also use a journal template to keep records. Look here and learn more about the importance of trading journals by accessing the free articles at Saxo. Once you learn the important factors, using the trading journal will be much easier.
Point 3: Reason for the specific trading
The reason is whether you have invested money by determining the trend or what.
You could have invested by doing data analysis also. But the primary purpose is that should mark the reason for investment.
Point 4: Conviction
That is how anyone senses about the specific trade. You can write that in the remarks section. There are a few patterns or algorithms that are going to use to decide. Suppose you analyze the data more deeply and concluded making a trade. Then the rate of conviction is high.
On the other hand, if the mind’s instinct is not making any specific decision about the trading. Then the rate of conviction is low. You can write down that in the journal to see how confidence works.
Point 5: Write down the details after every trade
Everyone should keep the record daily to maintain the business effect. After every transaction, write down the things accordingly to the column in the spreadsheet. If you are getting late. Then maybe you forget the data that you should remember. So, please write it down as they are still fresh in mind.
Point 6: Assemble data accordingly to trades
We have already discussed this in point no 2. We are going to discuss data processing in this section. Suppose by analyzing the conviction data, you will get high success rate. The same rule is also applicable for low success rate. Suppose you see any change in the result. Then change the plan accordingly. But make sure you do not make the plan complex as it never helps in trading profession.