It is a handy tool that helps you plan future trades, document existing trades, and keep notes on your emotions during a trade. Also, this one simple tool can help you build a profitable trading strategy to help you earn a nice amount of money.
Are you ready to know what it is? The secret to every trader's success is a trading journal. But, what is a trading journal, you ask?
Here's our complete guide to a trading journal and how it can help you become a successful trader.
What Is a Trading Journal?
Trading journals record all of your actions as a trader, such as risk management, strategy development, and psychology. When created and used correctly, a trading journal can be very effective. You can become a successful trader regardless of market conditions by maintaining a trading journal and using it properly.
What Are the Benefits of a Trading Journal?
There are many benefits to keeping a trading journal. As you learn what works and what does not for you, your trading journal helps you become a more efficient trader by noting where you are successful and not.
Thus, you can focus on your strengths and see areas for improvement. Below are more benefits to keeping a trading journal:
- You can determine the viability of every trading setup
- Identify your weaknesses and work on them
- Help you obtain industry-specific data
- You can set incremental goals with a trading journal
- You can use it as a portfolio
- Enhances the efficiency of risk management
- Boost accountability
- Help you discover if your emotions are making decisions for you
Keeping a trading journal is quite apparent to have several benefits. Therefore, both beginners and advanced traders should keep a trading journal. While it might appear difficult at first, discipline will help you become a better trader.
What Are the Different Types of Trading Journals?
Your choice of journal program will greatly affect future-proofing, user-friendliness, and how much detail you can dig into your trading performance. While there are many choices for trading journals, they all fall under one of these three categories:
- A trade journal online or in print
- Application or spreadsheet
- Keeping a trade journal manually or automatically
Online journals have the advantage that they live in the cloud so that you can read them from anywhere, at any time, from any device. Also, the app downloads and installs updates for you; there is no need to worry about data loss when your computer crashes because your data is stored in the cloud.
How to Start a Trading Journal on Your Own
Yes, a trading journal template can always be downloaded for free; however, it's still essential for you to learn how to create one. Then, your own trading journal can be customized to fit your trading style and needs in various formats.
A trading journal spreadsheet is the first step, followed by a written document. Of course, you can use Google Sheets, Google Docs, Microsoft Excel, and Microsoft Word to create your journal.
You will use these to write down your trades and thoughts. Alternatively, you can add the written document to your spreadsheet as a separate tab.
Your trading journal will greatly impact your success if you know what you record daily. There are several examples online for trading journals. Whatever template you choose, make sure that each trade has a column in your spreadsheet. You can include columns such as:
- The date of entry
- The date of exit
- Short/long-term direction
- The entry price
- The exit price
- Trading Fees
- Percentage of profit and loss
- Notes on the trade
Traders might also include the time frame, screenshots, or anything else they deem necessary in their analysis. But, again, what matters is that the information works to their advantage.
There should be a section for each day in your written document to organize your thoughts and ideas. For example, traders express their creativity in their written documents, while their spreadsheets help them measure the profitability of their creative pursuits.
How to Use a Trading Journal as a Beginner
Let's discuss using a trading journal now that you know how to create one. For starters, whenever you make a trade, you need to understand why you are doing it. Having a written document can be helpful in this regard.
Ideas will come to you as you look at the market each day, and feelings will flow through you. So you can recognize anything that may help or hinder your trading performance, you need to get your ideas and feelings down in writing. It could be market behavior in general or past, present, and potential trades.
You can also argue over the merits of a specific trade idea in your written document. However, you should view your trade ideas from all angles so that you can identify their strengths and weaknesses.
The next step is to turn to your spreadsheet after you have written down your thoughts and emotions. Compared to your written document, your spreadsheet is more like a logical space than a creative space. Here, you will keep track of all of your trades, so make sure to keep it up-to-date and organized.
You must measure your successes and failures accurately to have a successful trading journal. It's crucial to maintain accurate records with your spreadsheet so that you can judge how profitable your ideas were in your document.
Keeping track of your trades after they are executed is a good habit to develop. In the future, you'll be able to save time by considering them when they're fresh in your mind.
Now That You Know What Is a Trading Journal, It’s Time to Invest in Yourself!
The type of trader you are does not matter. Success in trading can be a tricky thing to achieve. If you do not plan and document your trading performance, you will move aimlessly through the markets. Another reason why you need to know what is a trading journal. Of course, even with a trading journal, you may still need some help in being successful. But, as a Spiking community member, you'll have access to all the tools and knowledge you need to succeed in the market. Come discover the right plan for you!
Join the Spiking Wealth Community
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