A trading journal is a log by which you can record the trades. Traders can easily use it for reflecting the previous performance so that the evaluating process can be easy. They can also analyze the points that should be improved for continuing the business. Today we will discuss everything about it.
Why the trading journals are essential
The major reasons for keeping the journal is-
- It can increase e consistency of performance
- Help the investors to identify the strong points and weak points
- It can keep the traders accountable
- Always help to choose the perfect and suitable strategy
- Must needed thing to create an efficient plan
The trading plan always helps to set the guideline for completing the strategy. It includes risk management, money management, effective strategy, and the psychology of the trader etc. These things are very crucial to achieve the desired success in the Forex market. Before you read this, chose your broker very wisely. Trading with Rakuten is easy and many Aussie investors consider it as the best place to start trading Forex. Now, let’s explore the important details.
Steps to create a trading journal
Creating it is an easy method. You can relate it with your style and goals. The following steps are the basic guideline to create it.
- Try to choose between a spreadsheet or a book. Professionals often recommend using a spreadsheet.
- Identify the specific information that you are going to record. For example, we can tell the underlying asset, position size and the date of the trade
- When you just finished the stop losses and take profits, try to record the trades directly into it.
- After some designated period, you can compile the data and reflect on the trade deals. The designated period can be in weeks, days, or months.
Choosing the spreadsheet or book
The spreadsheet has built-in functions which are analytical in nature. So, the first choice is to select the spreadsheets instead of the book.
Identifying the suitable information for recording
The standard format of it is straightforward in nature. It can help you to focus on the trades as well as providing some essential information, including specific criteria of the business. Useful information should include two reasons for trading. This reason could be based on a combination of technical and fundamental investment analysis. Once you completed some trades, then you can quickly reflect on the useful information that can bring a good outcome. This can also help you to identify the best-suited method for trading.
The second important thing is conviction. It can identify the feeling about trading. If the deal is based on technical pattern, and if the pattern checks off several guidelines, then the conviction is marked as high. On the other hand, if the basic story is not so satisfactory, then we can consider the conviction as low or medium. It is depended on the factors that can modify the trade.
Record the data directly after the trade
Making in detail record after finishing the trade is a perfect habit. It should be added in the journal. This method will not let you remember the highlighting points. Try to continue this practice only after placing the take profit and stop loss.
Compiling the data and highlight upon the trade
After a few weeks, investors quickly can gather a lot of data to compile in the trade journal. If there is a conviction criterion in it, we need to specify the number of successful trades while the conviction was medium, low, or high.
Once you include these data in the journal, it will be adequate to make the plan easier. It is a must needed thing for the newbies if they want a successful career in this profession. It will record continuous performance and activity so that the investors can implement a different financial strategy and plan. When you achieve the ability to identify the weakness and strength, overall performance will improve automatically.