Trading journal: what it is and how to review it to improve results

What makes a successful investor? He learns from his mistakes. A trading journal is perfect for seeing your strategy from a different perspective. As a broker, we keep a real-time record of all your trades, but there are many advantages to maintaining a separate trading journal.

What is a trading journal?

A trading journal is a systematic record-keeping tool traders use to document their trading activities. It is a personal log where Forex traders can track their trades, analyse performance, and reflect on their decision-making processes. By maintaining a comprehensive journal, traders can gain insights into their trading habits, identify strengths and weaknesses, and make informed adjustments to their strategies.

What are the benefits of a trading journal?

There are several advantages to keeping a trading journal.

Identifying your strengths/weaknesses

A well-kept, detailed trading journal is a powerful tool that empowers you to learn more than a book or seminar. It allows you to identify your strengths and weaknesses, visualise beneficial patterns, and make informed decisions. This sense of control can be a game-changer in your trading journey.

Discipline

Keeping a trading journal not only becomes a regular trading day activity over time but also instils a sense of accomplishment and motivation. It helps you be consistent and disciplined as a trader and serves as a brilliant planning tool. This feeling of being on top of your game can be a significant motivator in your trading career.

Decision-making

Thirdly, it will help you verify your performance. You'll be able to see how well your methodologies perform in changing market conditions and re-adjust them if necessary. It's essential to review your systems so that they deliver in the trending market. For example, are my stop-loss orders too tight or too loose? Should I start using a different timeframe? You can address these questions once you have a fully comprehensive trading journal.

Master emotions

Trading journals provide a sense of reassurance and confidence in the marketplace. With a trading plan and a journal, your trades won't feel random, and losing trades will be anticipated. Thus, your losses won't make you feel like a loser. Having a trading journal provides a crucial mental and emotional benefit.

How to create a trading journal

Once you get your diary right, keeping a journal like this can quickly become a regular habit that fits seamlessly into your daily schedule. Let's take a step-by-step approach to creating an informative and convenient trading journal.

1. Select the format

It may take time to be obvious, but selecting the correct format will significantly influence whether you maintain a trading diary consistently. You can use a notebook, create a table in a document online, or use an app on your phone. Choose a format that fits effortlessly into your daily life, like notes on your mobile phone or an online schedule of weekly meetings and events. In that case, filling out a journal like this will become your habit. It won't become your long-term routine if you last wrote something long ago but decided to keep such a diary offline.

If you have just started trading, you will find reading the article 'How to start trading in 4 easy steps' applicable.

2. Select the parameters to track

When you begin filling out a Forex trading journal, the idea is to specify indicator values for several critical parameters. Let's start from the premise that our goal is to write down the details about each of your trades, note any changes you decide to make, think about how well your trades did and why, and include visuals to show your results. Many online examples can help you set it up. A simple entry in your journal could be a few sentences or a small table with all this information, and then you will supplement these inputs with personal comments and conclusions.

3. Make a template

Create a unified trading journal page template for yourself for future use, establishing abbreviations, terminology, and symbols.

4. Develop a habit of filling out a journal

Commit to regularly updating your journal for each trade and analysing your results to learn from your mistakes and improve your trading strategies. To help you start this habit, promise yourself to do this for 21 days. Psychologists affirm that doing something for three weeks can help you turn it into a regular activity.

Elements of a trading journal

So, we plan to constantly enter changing data into our trading journal. That means you should write down the date and time you made each trade, what currency pair you traded, how much money you put in, whether you thought the price would go up or down, where you started and ended the trade, and what happened when you finished it.

You can also add extra notes, like drawings of charts, your thoughts about the market at that time, and reasons for making each trade. You learn from your experiences and ultimately improve your trading skills.

How to review your trading journal

Now that you have begun recording your trading data, you can leverage this information to enhance your trading performance. To do this effectively, focus on identifying specific trends within your trades. Pay particular attention to what happened in the trades where you incurred losses. Carefully review your notes and the details regarding when you entered and exited those positions.

Analyse successful trades, too. Identify common factors that contributed to those wins, including your notes and the timing of your trades. By examining your losing and winning trades, you can make informed adjustments to your trading strategy. This approach will help you minimise your losses and maximise your profits.

In the article 'Risk Management' you can learn how to secure your investments while trading.

Trading journal software

Modern technologies have made it easier than ever to maintain a trading journal. It's no longer a tedious task done by hand: programs offer a range of additional tools to enhance your experience.

Look at the first illustrative example of such a program —Edgewonk. This tool does more than just record trades; it helps you analyse your trading strategies. It can automatically review your trades and show you where you can improve. You can also track your emotions, tag trades for easy searching, and set goals to see how well you're doing.

Another helpful platform is TradingDiary Pro. Its user-friendly design offers many features to improve your trading strategy. This software can automatically pull data from different broker platforms, making it easier to manage your information. It also provides advanced reports and tracks risk, helping you comprehend your trading performance better.

If you still prefer something straightforward, we're here to support you wholeheartedly. You can use Excel templates for your trading notes. Excel allows you to customise your journal to fit your needs. You can create templates, analyse data, and make charts to see how your trades perform visually.

Final thoughts

• A trading journal is essential for traders to learn, analyse, and self-reflect.
• It helps you identify systemic mistakes and ineffective strategies and recognise your strengths and weaknesses in trading.
• You can keep your journal on paper, computer, or phone using the format and style that best suits you.
• When selecting a suitable template for your journal, consider including mandatory elements while ensuring it is convenient.
• Additionally, a trading journal fosters discipline and patience, which are necessary to achieve results in trades and in any other field.