A great way of keeping track of your progress in operating the financial markets is to have a trading journal. This tool will help you understand in detail all your actions while trading, things like the market conditions, news that influenced your buying or selling process, or new ideas to improve your strategy.
Using a trading journal is a way of studying yourself; it will answer questions like: “how are you behaving while operating the market?” “Are you following your strategy?” “What is making you profit, or why are you losing money?”, and you will develop it from all the details that can help you improve your trading day by day. This is why I wrote this article, to help you create your own.
Keep reading and learn about what a trading journal is, why you need it, and how to create one.
What is a Trading Journal?
A trading journal is a log of all your trading activity; it is as simple as that, and it shall contain detail of all your trades and the main aspects.
This is a tool that professional traders use to keep track of their progress and as a way to evaluate themselves, and it should describe the three pillars of trading: analysis, management, and trading psychology.
Why do you Need a Trading Journal?
The reason is simple: you need a tool to keep track of your trading activity. With a record of your financial trades, it will be possible to know if you are making progress, and also will help you identify your mistakes in order to have better risk management, and win, this for improving your trading skills.
A trading journal is also helpful because it helps you create the habit and consistency of learning, which is necessary for your financial trading process. To be successful, you need to constantly learn to form your errors and modify things to improve your strategy.
How to Create a Trading Journal?
Your trading journal must contain the data that help you achieve your specific goals according to your trading style and strategy.
The following steps will help you to put together your trading journal:
- Create your document: You can create it in a spreadsheet in Excel or a sheet in Word; I would recommend you use a spreadsheet because you can calculate your profit results more comfortably there, and it will help you have a better organization of the data.
- Identify the data to include: Define which information is helpful to your trading activity, and keep in mind your trading plan and trading strategy. Some of the basics elements you will need are date, name of the financial asset, buying or selling, price, cost or commission, net profit, and position.
- Take notes: If you have the time, take notes of the results just as you finish your trade order. You can also take screenshots of your trades, and at the end of your operation, you can explain them with more details in your trading journal.
- Analyze your trading journal: Take some time now and then to analyze your results. It can be at the end of your trading day, every Sunday, or on a monthly basis. Choose your periods, but be committed to constantly reviewing your trading journal; this is a crucial part: you need to know if you are making progress or not, so you can act in time to solve any problem with your strategy.
Creating a trading journal is an easy task; you can use a template like the one we made in MDC Trading Academy for you, or create your version.
How to Maintain a Trading Journal?
The key to maintaining a trading journal is to be responsible and committed. Take the time to use it every time you operate the financial market, or when an improving idea comes to your mind. And, of course, take time to analyze it.
Spot your strengths or the things that are triggering your mistakes, take any observation possible into consideration. Remember that this is a tracking tool, but also one that you should use to improve your trading.
Make your trading journal as simple as you can. A tool is helpful because it makes things easier, therefore, do not make your trading journal so complicated. It should be easy to create and fill.
To create a routine for your journaling, choose a time of the day to fill it and a time to review it. If you want to be successful in financial trading, you have to give enough time to this tool.
How to Use a Trading Journal?
Now that you finally have a trading journal, you should learn how to use it. The following steps are my main recommendation:
- Take time to analyze the market before you start trading, and make some notes about the financial assets you are interested in and the possible influence of the news on your predictions. Also, take notes of how you feel: this will help you understand your emotions.
- Identify the financial asset, the moment you open a position, and the time you close it.
- Account the profits or losses for every market order you make. And, at the end of your trading, identify your net profit and net losses.
- When you make a profit in a trade, take notes of what were the things you did correctly. If you lose, also take notes.
- Finally, make some notes about your strategy: “Did you follow it?” “Was it efficient?” “How did you feel after you finished trading?” The questions must be the ones that help you to identify the reasons for your results, technical, external, or emotional.
Benefits of Keeping a Trading Journal
As I mentioned before: a trading journal is a tool for tracking and improving. These are some of the benefits of keeping it:
- Creates historical data of your trading operation, so any time you want, you can go back and see how your trading went.
- It helps you identify your feelings while operating and how news or other factors influence you.
- It is a great way to keep you motivated and to be consistent.
- You can manage your losses and profit better.
- It helps you to find out your weak spots and your strengths.
- It gives you a broader vision of your trading style, strategy, and if it is effective.
- It helps you to measure your proficiency as a trader.
- It is a way to keep improving your trading strategy.
Trading Journal Template
And here is your reward for today’s learning: our trading journal template. Remember that you can modify it to your needs, so feel free to add or remove things.
It is a very general but functional template. You will see how great it works on your trading career because it will keep you motivated every time you make some progress.
Note that you will also need to have a trading plan and a trading strategy, things we can teach you as to create and implement them in our course Senior Trader Program. Be part of it and learn to use all the necessary tools to be a successful trader!
I will be glad to find you there, and to share with you all my trading experience and knowledge, so you can become a professional trader!
What Should a Trade Journal Include?
The minimal things that a trade journal should include are:
- Date of the operation.
- Type of financial asset and quantity.
- Type of analysis.
- Net gain or loss.
How do you Record a Trade?
You record a trade by taking notes of all the data involved, such as date, type of security, analysis, gain or loss, and commission.
How to Review Your Trades?
You review your trades by analyzing the results. I know that profit and loss are some of the main aspects, but you should also remember the emotional part. Consider the strategy you are using and your trading plan. The main objective is to find out if you are proficient at your operation.
Senior Trader with more than 5 years of experience in the Futures Markets. With a degree in Business Administration from the University of Antioquia. A former profesional soccer player for the Colombian national team, Sebas began his trading career in college and it has become his exclusive source of income. Sebas has become and expert motivator and speaker and has personally worked with more than 500 traders to achieve their goals.