How to Create a Trading Journal

How to Create a Trading Journal

What Is a Trading Journal?

A trading journal is a popular tool regularly used by traders to help them understand their trading behaviors and monitor trends in the market.

Simply put, a journal is where you would keep track of each day's activity, including:

  • The trades you have made
  • The trades you considered but did not make
  • Profits
  • Losses
  • Other relevant information

Trading journals can be used by anyone regardless of trading experience.

They are particularly useful for beginner traders who are just starting to find their way in the world of stock markets and trading, or those trying to identify their personal trading strategy.

How Can a Trading Journal Help My Trading?

Keeping a trading journal will allow you to be able to quickly spot patterns within your trades. It can also be a helpful tool for identifying errors.

This can guide you into making better trading decisions in the future and learning more about the markets you are working within.

The benefits of keeping a trading journal can include:

  • Building a framework for your strategies
  • Helping to understand your motivations
  • Avoid emotion-related impulses
  • Avoiding questionable trades
  • Performance-driven growth
  • Insight into your strengths and weaknesses

How to Keep a Trading Journal

There are many ways to keep a trading journal.

Some people will use a combination of formats, such as dedicated software, spreadsheets and notebooks.

Whether you choose to use just one format or a combination will be down to personal preference.

Some people prefer the speed of software, whereas others will find that putting pen to paper in a notebook helps them to consider the impact of each day's trades.

Trading Journal Software

There is a wide variety of software available for traders to use.

Some will be very basic and geared more to beginner traders.

Other options will be more detailed and more suited to experienced individuals.

Spreadsheet

Spreadsheets are a versatile way of tracking your trade progress.

Through spreadsheets, you can accurately track all of the relevant information and format it into graphs, tables and charts to help show patterns and trading habits.

Notebook

This can be any notebook you want, although it should be entirely dedicated to your trading progress so that you do not have to wade through notes and shopping lists to find the data you are looking for.

What to Include in Your Trading Journal

When you decide to start keeping a trading journal, it can be challenging to work out exactly what it is you should track.

Rather than looking at the journal as a whole, it can be helpful to split the important information into two sections: technical markers and performance markers.

Technical Markers/Facts of the Trade

  • Entry and Exit date – The date and time that you start and finish your trade
  • Markets – Which markets are you using
  • Setup – The market conditions which triggered your trade
  • Trade size and limits – How much you are able to risk and how much you can afford to lose
  • Price on entry – The price when you entered the trade
  • Price on exit – The price when you left the trade
  • Profit or loss of the trade – The total value of your investment after trading has ended, including whether your made or lost money

Performance Markers

  • Goals and motivation – What was your end goal with the trade, and what motivated you to make it?
  • Philosophy and how you implemented this – What is your personal philosophy regarding trading, and how was this implemented?
  • Thoughts and feelings towards the trade – How did you feel before, during and after the trade?
  • Errors and potential solutions – Did anything go wrong? What would you do to avoid this next time?
  • Skills acquired – Did you learn any new skills through this trade?
  • Skills that need to be improved – Is there something you feel you could do better? How will you do this?
  • Future preparations – What can you do better in the future?

How to Create a Forex Trading Journal in Excel

Spreadsheets are a popular tool when creating a trading journal due to their adaptability.

The easiest way to do this is to combine a simple spreadsheet containing the details of the trade with an annotated screenshot of your charts.

Spreadsheet

This is an example of what your spreadsheet may look like:

How to Create a Trading Journal
How to Create a Trading Journal

As you can see from the chart above, by separating different topics into sections, you can quickly and easily see anything that may influence your trading and the results of each day.

How to Create a Trading Journal in 2021
How to Create a Trading Journal in 2021

Screenshots

It can be difficult to keep detailed trading journals while the markets are active.

It is a fast-paced environment, which means that losing focus can mean the difference between making a trade at the right time or not.

Taking and annotating screenshots of trading charts can be a useful way of keeping track of information during the trading day.

The completed and annotated charts can then help you to write up the relevant information in your spreadsheet.

It is also a good idea to store your charts in a separate file on your computer so that they can then be looked at as part of your review process.

Things to Include on Your Charts

  • Make sure that your chart begins at least an hour before you start trading. This helps to provide context and background information for that day's trades.

  • Mark when you begin and end trading with either a vertical line through the chart or a text note.

  • Throughout the day, make a text note of any changes in market conditions or errors that you make.

  • Once you have finished trading, note down information such as how many trades you made, whether you made any profits or loss and anything you think should be done differently in the future.

Key Tips for Keeping a Trading Journal

The exact look and content of your trading journal may vary depending on your needs, level of trading experience and what you hope to get out of it. However, there are a few key things that can make keeping a journal easier.

By implementing these key tips, you will find that reviewing and understanding your journal is easier.

Start Recording Before You Trade

You will then be free to focus on the trade itself by making a note of the relevant information before the trade begins, rather than trying to play catch up with the data.

Note down what it is that you are trading, the date, time and your intentions.

The other information can be completed at the end of the trade.

Write Everything Down

There may be times when you feel that writing everything in your journal is not necessary.

It could be that you think the information is worthless or that you don't see how it would help you in the future. However, everything is relevant.

If you start a trade but get sidetracked and do not end up exiting when you had planned to, note this down.

If you were feeling stressed before starting your trades for the day, it should go in the journal.

If recommendations by others influence your trades, write it in the journal.

All of this information is relevant as it can help you to understand your motivation, influences and patterns.

It could be that you need to set yourself reminders in case you get distracted. Perhaps trading when you are stressed will have an impact on which trades you choose or whether you are more likely to take risks.

If someone gives you advice that pays off, then noting it down will remind you that it is worth listening to that person in the future.

When it comes to trading, everything is relevant. It all works together to help create a more complete picture and can be used to perfect your strategies in the future.

Update Your Recordings as Soon as Each Trade Is Complete

It is important to update your journal as soon as you reasonably can.

By making this a habit, you will be ensuring that the information you add is fresh in your mind and as accurate as possible.

This is particularly important when it comes to the performance markers as they tend to be more emotionally based.

Review Your Trading Journal Once a Week

Regular reviews will help you to be able to notice patterns in your trading habits as well as any potential issues which may arise.

It is a good idea to set aside a little time each week to go over how your trades have performed and consider whether you need to implement any changes for the following week.

Make sure to note down anything that you notice in your review so that you don't forget about it.

Use Your Journal to Analyse Patterns and Your Trading Progression

Trading patterns and progression will become gradually more apparent over time.

The more consistent you are with keeping your journal and reviewing it, the more familiar you will become with any emerging patterns.

You can then use your journal to analyze your progress and plan how you want to improve in the future and any targets you may have.

Remember to write down whenever you reach a target. This will inspire you in the future when you may be struggling or feel as though you are not making progress as quickly as you would like.

Best Brokers for Trading

1. Pepperstone

Best for: Tight spreads and low fees

Pepperstone requires no minimum deposit and offers low trading fees.

It offers fantastic market analysis and trading ideas.

While the educational tools are adequate, the news flow is basic.

Customer service is available via phone, email and live chat, and all queries are answered promptly.

It is regulated by the FCA, ASIC, CySEC, BaFin, DFSA, CMA, SCB.

Pepperstone uses MetaTrader 4, MetaTrader 5 and cTrader platforms. MetaTrader is considered one of the best CFD platforms.

It provides access to 25 major stock indices, more than 60 shared CFDs, 21 cryptocurrencies and 17 top commodities.

Visit Pepperstone

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

2. XTB

Best for: International trading

XTB is a trusted all-around broker, established in 2002. It is regulated by the FCA and listed on the Warsaw Stock Exchange.

There is no minimum deposit for opening an account.

XTB uses its xStation 5 platform, which offers good customisation, search functions and modern design.

As a platform, it has all the standard educational resources and research tools.

It has over 2,000 stocks, though all cryptocurrency trading is paused on weekends.

Overall, the only negatives of XTB are that its fundamental data is limited, and there are high fees for some CFD trades.

Visit XTB

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

3. Tradex

Tradex is a premier financial services firm that has created a social investment community. With a full range of help available depending on your needs, you can invest and manage your portfolio yourself with the online platform and tools or have face-to-face contact with your Investment Manager.

With Tradex, you choose and buy your stocks, guided by your Investment Manager. These will sit in your portfolio, which is then managed by the Tradex team based on your financial goals, with a strategy devised to help you achieve them. Their smart strategies and sophisticated technology give you broad exposure to different market sectors so you can diversify easily and have more chances to build a strong portfolio.

The membership plan can be paid monthly (25 Euros) or annually (250 Euros). The membership includes:

  • Personal portfolio manager
  • Client Portal
  • Recurring membership
  • Portfolio management
  • Personal investment portfolio
  • Stock recommendations
  • Weekly appointments with an advisor
  • Stock trade ideas
  • Investment set up

Aside from the membership plan, the Tradex blog has a vast range of educational articles about everything from investment basics to things like NFTs and cryptocurrency so you can improve your knowledge and learn more about different investment opportunities.

Visit Tradex

Final Thoughts

There are so many options to choose from when it comes to writing your trading journal; therefore, be sure to find a format and method which suits you.

Implementing a regular and consistent approach will allow you to optimize the journal's potential to help you in the future. It should give a complete picture of the things which go wrong and the things which go particularly well.

However you choose to keep your trading journal, the most important thing is to be consistent.

WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.


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