The ability to learn from one’s mistakes is a valued asset in all parts of life. But it’s especially true when it comes to money. Investing is all about money and having a trading diary, regardless if you’re a day trader, or focused on the long term, is a must. Having a record of what you’ve done when opening and closing trades allows you to go around one of our main human flaws – forgetting and repeating mistakes. You may ask why it is important to keep a journal when you have all your trades in the account history section of your platform?
Many aspiring traders get caught up on the results of each individual trade; however, the professional trader knows that their trading performance is measured over a long series of trades, not just one or two. So, it’s important to have a way to track your results so that you can see how you are doing over a series of trades, this allows you to not get caught up on any individual trade. You can think of your trading journal as a constant and tangible reminder that your trading performance is measured over a series of trades.
In order to become a profitable trader, you need to act like a professional. Most trading desks around the world demand that their traders keep some type of journal, or at the very least notes on each trade. These notes must explain what they are doing, the setup, and the results of each trade. The act of keeping a journal is probably one of the main things that I have seen separate amateur from professional traders. Granted, the journal itself doesn’t contribute to your profit and loss statement directly, but over the longer-term, it does make a difference.
The main goal of keeping a detailed trading journal is to prevent you from taking impulsive actions, which will ultimately result in saving you money. This is why you must write down as much sorted data as you can, including trade entries and exits. It is also useful to record your thoughts and visualize everything by capturing your trading session with screenshots on your platform. Writing down your thoughts before entering a trade will also make you think twice of your strategy. If you see you are entering the position for any other reason apart from following your strategy, you shouldn’t execute the order.
A successful trader not only examines each particular trade, but also the progression of their trading performance. Through an effective trading journal, forex traders are able to hasten the path towards a more disciplined and profitable trading career. By taking advantage of this tool, you can quantify, scrutinize and enhance your trading process. You can thoroughly keep track of your skills, emotional triggers and other aspects of trading you wish to measure and optimize.
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