Your Trading Journal

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Introduction

Your journal should be placed in your Trading Plan.  Traders tend to keep journals to improve their future performance - you need to learn from your mistakes.  You'll have all the transaction data from your broker, but this info won't record why you took that position in the first place and what your emotional state was before you opened your position, or while the position was open.  You need to record your gut feeling about a trade.  If your system signals "buy", your head may say "don't buy".  Remember discipline?  You should trust your signals, but over time you may want to change or tweak your system on the back of your journal records.

What to Record in your Journal?

Over time your journal should grow, alerting you to the important lessons you've learned on your journey.  It should record everything you do and feel before, during and after a trade.  For instance, what news releases to avoid or trade and do you need to risk more or less per trade?

below I've highlighted some of the things that should be recorded in a journal, so you can learn from each trade:
  • Market Conditions - What was volatility like? How strong or weak was the trend?  What was the level of participation in the market?  What market were you trading?  Was there a holiday somewhere?
  • Entry & Exit Reason, time and place?  A lot of this will be in your system and your broker will give you raw trade data.  Record this to tweak your system in the future.  For instance, maybe your system works better entering at 08:00 am than 09:00 am etc, or works better on a Monday... Did you enter on an up candle or down candle etc... Did you enter bang on the trigger (hopefully you did)... What were the exact reading of your indicators... Do you need to change your indicators? Did you take partial profits? Are you missing trades? Were the signals legitimate?
  • Were you long or short?  This will allow you to determine whether long or short works best in your system
  • The Trade Area - What actually happened during your position open?  Did the position behave in the way you thought it would? Did the position originally go against you, before going your way? Was it possible to enter better? Was there support or resistance against you during the trade? If so does this need to be placed in your system?
  • Money Management - was your position too high/low, did you make a mistake calculating your position size, was your risk adequate, etc...?
  • Charting - Did your charting package have all you needed?  Attach your chart.
  • What were your weaknesses during your trading day?  Were there telephone calls, was there system down-time or other interruptions that follow a pattern? Were you lax on your trading system execution?
  • What were your strengths per trading day?  What did you do well?  Did anything good stand out about your trades?
  • Anything else stand out that may be learned?  Did your limit order execute as expected, was there slippage, could you have received a better price from another broker
Reviewing Your Journal

Now that you've started your journal, you should review it periodically and learn from it to improve your future trading. What to look out for?
  • Long trades versus short trades? Do they correlate with the overall long run trend?  If so do they work significantly more when correlated?  What's the balance like and does it need changed? Are you unknowingly trading against the trend?
  • Number of winners and losers?  Does the winning to losing ratio meet your strategy needs?  Are you deviating from this ratio and why?  What market gives you the most winners and losers?
  • What's your overall time in a trade?  Are you still a Day Trader, or Swing Trader?  Are you holding trades for too long or for too short.
  • What's your time in winning trades and losing trades?  If you're in you're losers to long this could mean disaster.  Are you cutting your loses quickly enough and in your winners long enough?  Keeping losing positions for a long time can mean you miss out on trading opportunities
  • Profit and Loss Breakdown by long/short and market conditions?  Are you trading better in ranging, trending, volatile markets etc...
  • Average Profit and Loss?  Is this acceptable over time?  If you let trades run a little more, or cut them sooner would this increase or decrease?
  • Largest Winner?  What was so special about it? What were the market conditions like?  Can it be replicated, or was it a freak?
  • What was your maximum and average draw-down?  What was your largest losing sequence, prior to being profitable again? Are you comfortable with this in your system?
  • Expectancy?  Has everything been as expected, or a big let down?  What are you going to do about it?
To Sum Up

Your journal should be reviewed as often as possible, especially with new systems that have just gone live.  After a period of time you may review it on a quarterly basis, or so.  When doing so make sure you learn from it and change your system and trading plan if it's needed.  

Make sure you keep your journal up to date with everything, so make time every trading day in real-time to update it.  You'll thank yourself at a later date when you find that you've inadvertently been trading a currency pair that has consistently lost you money, or you've not been adhering to your system as often as you think. 


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Introduction

Your journal should be placed in your Trading Plan.  Traders tend to keep journals to improve their future performance - you need to learn from your mistakes.  You'll have all the transaction data from your broker, but this info won't record why you took that position in the first place and what your emotional state was before you opened your position, or while the position was open.  You need to record your gut feeling about a trade.  If your system signals "buy", your head may say "don't buy".  Remember discipline?  You should trust your signals, but over time you may want to change or tweak your system on the back of your journal records.

What to Record in your Journal?

Over time your journal should grow, alerting you to the important lessons you've learned on your journey.  It should record everything you do and feel before, during and after a trade.  For instance, what news releases to avoid or trade and do you need to risk more or less per trade?

below I've highlighted some of the things that should be recorded in a journal, so you can learn from each trade:
  • Market Conditions - What was volatility like? How strong or weak was the trend?  What was the level of participation in the market?  What market were you trading?  Was there a holiday somewhere?
  • Entry & Exit Reason, time and place?  A lot of this will be in your system and your broker will give you raw trade data.  Record this to tweak your system in the future.  For instance, maybe your system works better entering at 08:00 am than 09:00 am etc, or works better on a Monday... Did you enter on an up candle or down candle etc... Did you enter bang on the trigger (hopefully you did)... What were the exact reading of your indicators... Do you need to change your indicators? Did you take partial profits? Are you missing trades? Were the signals legitimate?
  • Were you long or short?  This will allow you to determine whether long or short works best in your system
  • The Trade Area - What actually happened during your position open?  Did the position behave in the way you thought it would? Did the position originally go against you, before going your way? Was it possible to enter better? Was there support or resistance against you during the trade? If so does this need to be placed in your system?
  • Money Management - was your position too high/low, did you make a mistake calculating your position size, was your risk adequate, etc...?
  • Charting - Did your charting package have all you needed?  Attach your chart.
  • What were your weaknesses during your trading day?  Were there telephone calls, was there system down-time or other interruptions that follow a pattern? Were you lax on your trading system execution?
  • What were your strengths per trading day?  What did you do well?  Did anything good stand out about your trades?
  • Anything else stand out that may be learned?  Did your limit order execute as expected, was there slippage, could you have received a better price from another broker
Reviewing Your Journal

Now that you've started your journal, you should review it periodically and learn from it to improve your future trading. What to look out for?
  • Long trades versus short trades? Do they correlate with the overall long run trend?  If so do they work significantly more when correlated?  What's the balance like and does it need changed? Are you unknowingly trading against the trend?
  • Number of winners and losers?  Does the winning to losing ratio meet your strategy needs?  Are you deviating from this ratio and why?  What market gives you the most winners and losers?
  • What's your overall time in a trade?  Are you still a Day Trader, or Swing Trader?  Are you holding trades for too long or for too short.
  • What's your time in winning trades and losing trades?  If you're in you're losers to long this could mean disaster.  Are you cutting your loses quickly enough and in your winners long enough?  Keeping losing positions for a long time can mean you miss out on trading opportunities
  • Profit and Loss Breakdown by long/short and market conditions?  Are you trading better in ranging, trending, volatile markets etc...
  • Average Profit and Loss?  Is this acceptable over time?  If you let trades run a little more, or cut them sooner would this increase or decrease?
  • Largest Winner?  What was so special about it? What were the market conditions like?  Can it be replicated, or was it a freak?
  • What was your maximum and average draw-down?  What was your largest losing sequence, prior to being profitable again? Are you comfortable with this in your system?
  • Expectancy?  Has everything been as expected, or a big let down?  What are you going to do about it?
To Sum Up

Your journal should be reviewed as often as possible, especially with new systems that have just gone live.  After a period of time you may review it on a quarterly basis, or so.  When doing so make sure you learn from it and change your system and trading plan if it's needed.  

Make sure you keep your journal up to date with everything, so make time every trading day in real-time to update it.  You'll thank yourself at a later date when you find that you've inadvertently been trading a currency pair that has consistently lost you money, or you've not been adhering to your system as often as you think. 


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