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Importance of Trading Journal to find your edge in the Market

Mistakes are the best teacher. If you ask a veteran from any filed- what teaches you the most? The bunch will straightforwardly answer - the mistakes that they have made in their journey teaches the most important lesson for life.

But another truth is that, learning from mistakes only possible when you introspect them and work over them. To introspect mistakes, you need to maintain a diary, journal or written piece of article.

Traders are not different from them as well. Many successful traders maintain their own journal to look back themselves and make them rational during the trades.
What is a Trading Journal?

Simply, your trading activity in a written piece is known as a trading journal. It might be a simple diary or written digitally. A serious trader who wishes to make money regularly from the share market, maintains the journal to evaluate himself time to time in his journey.

To be a successful trader you need to understand your weakness and strength. There is no perfect trader. They all make mistakes. However; we can separate them in two categories one who don’t maintain their journal the other who do this.

To be a successful trader you need to understand your weakness and strength. There is no perfect trader. 

Writing a journal is like taking Vitamin Pills that you take for improving the immunity that helps you come up with a better immune system that fights the different types of diseases - Deadly Virus and Bacteria.

Same way a trading Journal is a vitamin pill that improve your trading skills slowly but certainly. Eradicate your emotions that bars your profit. Kills Virus and Bacteria of noise and ill-discipline.

A trading Journal is a vitamin pill that improve your trading skills slowly but certainly. 

There are three common attributes of a prominent trader; do you have any?

1. Good Trading plan

2. Good trading strategy to execute the plan

3. Methodology to review and improve the trading performance and plan.

Every other trader has his trading plan and trading strategy but lacks the methodology to look back - Trading Journal.

The objective of the Journal is to monitor the weakness and strength of your trading system as well as to boost confidence and conviction in you while executing the trade with consistency.

A poor trading system is less harmful to you than your inability to follow the rules that you have mentioned in your plan. Your Trading journal makes sure that if you follow the rules properly.

Importance of the Trading Journal

  • Journals are only as good as what is written in them. If one fails to write accurately or track trades, it becomes hard to judge trading performance.
  • It is a never-ending effort, not just an on and off assignment.
  • Do not cheat yourself while writing the journal. Write it with full honesty.
  • Writing and maintaining a journal can make you a disciplined trader.
  • It helps you to learn your psychology in your own way.
  • Trading Journal is a mirror that reflects the good and bad in you - the strength and weakness in you. This is something that no mentor, no book, no video, no seminar can teach you. You have to experience it yourself. Only this experience opens the door of opportunities.
Composition of your Journal
· Date and Time – Date you entered your trade
· Time Frame – Time frame you entered on - my 5 min or 15 min
· Strategy: The strategy that trigger entry
· Price Action: What type of action you saw in price.
· Market – Markets you’re trading
· Lot size – Size of your position
· Long/Short – Direction of your trade
· Price in – Price you entered
· Price out – Price you exited
· Stop loss – Price where you’ll exit when you’re wrong
· Profit & Loss  – Profit or loss from this trade
· Initial risk and reward– Nominal amount you’re risking
· Include Charts: You can include charts on multi-timeframe

The Final Advice
·Write your Journal in each trade. Start writing with initiating the trade and end writing after closing the trade.
· Write every tiny details. If your decided to play PUBG while your trade was running and forgot to exit the trade, write it down and also explain why.
· Pay very close attention to your emotions. Then make sure you write them down.
· Make sure you write about your psychology as well as details about the market and your observations.
· Include charts, data and their behaviour in a particular situation. Write your new finding related with chart or data or any other tools that gives market insights.
· A trading journal is a learning tool and a great mechanism for training your eye to see the setups you want to be trading.
Also write down that you missed a trade opportunity as you were on a call to your girlfriend or boyfriend or flirting someone.

Reviewing Your Journal

Take out some time from your busy schedule each week or month, to look back what you did, notice the common problems, and mark the strengths. This activity can help you to find your area to work on.

Taking screenshots is more effective at capturing information than you could by just writing in a journal. Plus, if you do want to write stuff down, you can do so right on your charts, or keep a written trading journal as well. Be diligent in this routine, so that you have every trade you make recorded.

Do you maintain your trading journal? Write us in the comment box.

Reading Recommendations

Importance of Trading Journal to find your edge in the Market Reviewed by Kumar Chandan on March 24, 2020 Rating: 5

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