Posted by: joetradingplace | June 18, 2012

Importance of keeping a trading journal

 Having a trading journal is something that is always essential to your trading. A journal should record all your trades including the good and the bad ones with the exact entry/exit date and time and also the chart screenshot for each trade. An effective trading journal should include the strategy behind each trade, what the market did after taking the trade, how you felt before placing the trade and how you felt after you placed the trade.
This information could help sharpen your trading skill, by having the knowledge of successful trading situations, the events can often be revisited mentally, and the successful trading situation reproduced to make even more successful trades.

The screenshot is more important than anything else in the journal; you should take a screenshot before the trade and then take a screenshot after the trade has been concluded. A picture speaks a thousand words, you will learn a lot from the screenshots of all your trades. Example of trade screenshot shown below…showing trade before and after…

Before

After

When you work for a firm, you have some senior managers or supervisors above you. They work with you and help you develop your career…imagine the trading journal as your manager; he/she is there to develop you as a trader. When you take trades impulsively that are not part of your setups, you should be able to explain yourself to the manager why you took the trade. Every Friday after your trading week, you should go through all your trades in your journal, reinforce the good trades in your journal…and learn from your bad trades so that you wouldn’t repeat the same mistakes in the future. After a while, you will see that your trading journal is the best and biggest teacher you could ever have. Make sure that for every trade you take you have a valid reason…so all the reasons must be written in your screenshot…all the targets as well and reason for picking those target levels.

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