Why You Should Keep a Forex Trading Journal
Trading can be a daunting activity. But with a simple Forex Trading Journal, things can get more accessible and better organized.
Your emotions are on edge, your money is on the line, and your beliefs about the market are your best weapon to try to take a bite of whatever instrument you are trading and succeed in this ultra-competitive business; the simplest yet more effective tool is to keep a forex trading journal.
Anyone could enter a trade and be successful once or even a few times. But to keep being successful in the long run, you’ll need consistency, and the only way to achieve this is to understand and analyze what you are doing and why you are doing it.
I don’t mean that you must have a strategy, which you should have. I also don’t mean that you must have your emotions in check, trade with a stop loss, limit your position sizing, or any of all these things that you should also have and be aware of their importance.
Keeping a Trading Journal is one of the critical components of your trading success and your trading business.
It can be cumbersome and tedious, especially if you scalp or make many trades a week or a day. Because every time you trade, you will have to remember to enter all this little data in a chart; I know it is not the funniest thing to do.
But if you plan to make your trading into a serious business and eventually make some money or even a living out of it:
You MUST start keeping a Forex Trading Journal.
How To Use Your Trading Journal As a Powerful Tool
This Forex Trading journal will prove amazingly useful after a few weeks and, even better, after a few months. You will have invaluable data on why and how your performance went. You will have a snapshot of your victories and defeats to help you understand how your system performs in the long run.
So, for example, if after six months of trading a specific plan, you find out that you had six losses in a row, and then your system kept on performing with normality, you will know what to expect.
The next time you have a few losing trades in a row, you will not get discouraged, angry, or emotional about it and start to see it as “normal” since this behavior will be within the parameters of your trading system.
This will also help you define your position sizing and find the overall expectancy of your system.
Another advantage of your Trading Journal is that from the moment you start taking note of every trade, you will stop entering impulsive trades (or at least you will do less of them) since everything will be on the record, which will make you think twice about joining or not entering a trade.
It would be best if you remembered that suitable trading is about good habits, and your Trading Journal will be your self-control on how you handle those good habits.
Download a Sample Forex Trading Journal
You don’t need to make it any complicated, and a few parameters would be enough to retrieve all this vital data to understand and improve your trading habits.
I will provide a Forex Trading Journal Sample where you can download a spreadsheet with parameters that work for me. However, you can add as many as you want if you need more info, don’t make them overly complicated, and remember that you will need to keep this spreadsheet by your side and enter the information EVERY time you trade.
After a few weeks of doing it, it will become second nature, and you will not even think about it anymore.
Trade, demo, please, for a few months with the journal and use ONE or, maximum, TWO systems that you backtested and feel could work for you, and let me know how you did with the journal. I am sure you’ll have tremendous insight into your personality as a trader and how to make the system work for you.
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