The trader’s diary helps to record the results of your transactions and, on their basis, analyze your trading decisions. It can be very useful when you are on a losing streak, and the effectiveness of the strategy is under the question.
Why is it needed
With the help of the trader’s journal, you can understand the reasons for the losses in your strategy. If they are systematic, then it makes sense to change something in your trading system, for example, stop trading at a certain time or exclude unprofitable currency pairs. On the other hand, losses can be caused by your emotions – fear, greed, passion, etc. In this case, a trader’s diary will help to understand when emotions overwhelm you and to learn how you can control them.
How to keep a trader’s journal
As a rule, a trader’s transactions log is kept in Excel tables where all the transactions you have made are recorded, and then, after a trading day or a week, the results are analyzed. The trader’s diary is a universal tool: it is effective for all trading terminals, markets, currency pairs, stocks, futures, and other assets. In addition, such a journal can be used on demo accounts when you need to check the profitability of a trading system over a long period of time. For example, the Olymp Trade broker web site offers convenient demo accounts for its users where they can practice to polish their strategies and skills.
If you do not know how to keep a trader’s journal, then adhere to the following recommendations:
- Enter all your trading results in the table:
- In the first column, you need to record the time and date of your trade.
- In the second column, write down the currency pairs you are trading and after some time, you will determine which currency pairs are profitable and which ones are better to exclude from trading.
- In the third column, you need to write the opening and closing prices of the transaction, the lot volume, as well as the size of taking profit and stop loss.
- Write down comments on your trades. In addition to quantitative statistics, it is also necessary to write down your thoughts on each trade:
- Why have you made the decision to open (close) a trade?
- How have you analyzed the market?
- Why have you closed the trade ahead of time, etc?
Various life situations can influence your decisions. For example, if you notice that during a bad mood you make more mistakes, then at such times it is better to avoid trading.
Many traders do not keep a trader’s diary, considering it an empty exercise and make a big mistake, since the transaction log not only allows you to check the profitability of a strategy and improve it but it is also an important element in the psychology of trading, increasing self-discipline and control over your emotions.
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