If you can’t measure it, you can’t improve!
Journaling is your self analysis tool where you are your own coach
You do not know whether or not you have a successful trading system unless you clearly define it and and track it. With a clearly established metric for success, you can quantify progress and adjust your process to produce the desired outcome. Without clear objectives, you’re stuck in a constant state of guessing.
A trading journal is one of the most powerful tools to track your performance . It is where you record and review daily, weekly trades. Entries, Stops used, targets, the time of the day you tool the trade, market conditions, etc… are just a few details that every trader needs to track down.
Journaling will not only track your progress but will point out your mistakes and trading system flaws. It will point out what strategies work for you and what …not. It created accountability and what are the areas you need improvement.
Journaling a self analysis tool where you are your own coach. Journaling your trades will help with trade development , tweaking and perfecting strategies, timing, risk and developing a well greased trading system. It will determine your strengths and weaknesses.
Here are some elements that you need to keep track of:
- Entries
- Stops
- Targets
- Strategy (set-up or pattern)
- Date and Time of the day you have entered the trade
- Position size used for the trade
- Duration of the trade
- P&L – the result
- Comments – ample description of the trade
Documenting your trades is an essential part of trading.
At the end of the month and quarter you can make a self evaluation, see what worked for you and what has not worked. A common mistake many traders make is either jumping in the trade too soon or chasing trades, exiting the trades prematurely, not letting winner run or waiting too long until the traded pulls back and wipes out all your profits. Another mistake is overtrading, or jumping from one ticker symbol to another, oversizing or revenge trading and doubling in. This tracking system will help you alleviate that.
When you have all your data at the end of the month or quarter you can evaluate and determine all the mistakes.
A great way to add to your metric is charting. Print 2 charts of the same stock / futures / forex / options trade you took:
- On one chart mark the area where you entered, where you placed your stop and your exit.
- On the second chart analyze where the entry should have been, the stop and how it needed to be managed.
Do this every day for all your trades. It will make you more selective, patient and you will learn from all your trades.
There are 253 trading days in one year. Imagine taking only one trade / day and analyzing it – at the end of the year you would have 253 charts analyzed in depth, 253 lessons to consistency.
Sow the seeds of hard work and you will reap the fruits of success.
Journaling can be done manually or using a journaling software like TraderSync (our partners) where you can upload your data directly from your broker or input it manually – whichever you prefer. If you want to give it a try CLICK HERE to get a 7 DAY FREE TRIAL
