Do you know that Forex trading journal can do much more than just keeping your trading secrets (or foolish mistakes) hidden from your rivals? More importantly, it can also improve your trading decision-making and risk management over time by learning and comparing your current to past performances.
3 Reasons Why You Should Make Trading Journal
Writing a trading journal isn't only for nerd's fancy purposes. Here are following reasons why you should start it:
a. History record
Where do you think you'll keep track of all the mistake you've done? Yes, that's why you need a written note to record it, so you can recall and learn from that past mistakes. Furthermore, trading journal can give you much more personalized touch than standard terminal trading log.
Faintest pen is still better than the best memories - Chinese proverb
For instance, you can add fundamental notes or specific situations you are in, for each opened position. Not only that, you can also spotlight what pairs performs the best or which time frame gives you the most opportunities. Secondly, you can track how far you have progressed since your first trades. With that knowledge, you can gauge how much risk you can take to maximize your profit gains.
Proper trading journal can provide you with information to plan ahead as you open or close Forex trading position. Specific information such as; position sizing, Stop loss and Take Profit parameters can be gathered from past trading performances. Simply put, if it works, then you can repeat the same process over and over again. This process can pretty much ease your decision making during familiar market conditions. Therefore, you won't doubt or second guess your trading setups anymore, as you have understand how it will perform in similar situations.
This is the most important feature of trading journal as it brings the most benefits. Evaluation process gives the opportunity to mark and compare each aspect of your trading performances. With that in mind, you can spotlight which trading aspect in needs of most improvement, so you can prioritize it over others.
Also, over time you can value how each trading system, progress or planning have worked out for you. By that process, you can scratch out the bad apples and keep the good ones.
How To Make Neat Trading Journal
Raise your hand if any of you still make diary entry every day! If that's the case, writing a Forex trading journal will be your second nature in no time. But, don't sweat it, this article will guide anyone willing to learn efficient Forex trading!
First thing first, select either one of these media to start writing and stick to it:
There are two main approaches in constructing a Forex trading journal:
a. Singular facet
This method focus solely on either technical analysis or fundamental analysis. This is because some trader pretty much uses singular method to make Forex trading decisions while ignoring other analytical noises.
Let's say Jamie focuses on technical, so he ignores fundamentals. By then, he can record his chart printouts and make some notations on it, such as; which trade signal got triggered, where the Stop Loss and Take Profit levels were, and whether or not the price was testing either support or resistance level.
This method aims at isolating streams of information so it won't be contaminated with unnecessary noises. However, do mind that the drawback is the risk that you may skip over unnoticed factors.
b. Multiple facets
Simple, this is the total opposite of singular approach. Essentially, you may combine both technical or fundamental analysis as records for each closed positions. Additionally, you can even add another aspects such like, emotional state or domestic pressures to be weighed in as well.
For example, Clark uses price action and economic news to gauge specific pairs outlook. He will also record his chart printouts and adding plethora of notations on it; every single things that is worth noting.
This Forex trading journal method suits seasoned traders better than beginners. Why? Because without a proper baseline, you can easily mix up too many analytical noises, which later blurs out the clarity of your record. So, instead of getting worthy information, you end up with messes and confusions. On the bright side, this mixed method covers every aspect of price moving factors. This is rather preferable if you want a complete overview of your trading record.