This is a Guest Post by AK of Fallible
Today we are going to discuss why you need to keep a trading journal. We’ll talk about why it will improve your results and also how to make one.
Trade journals are useful because they let you become your own coach. The journal is the equivalent of game footage. And what do all great players do? They watch footage of themselves. That way they can see what works and what doesn’t, and adjust accordingly. That’s the same thing you’ll be able to do once you have your trade journal in place.
The most important thing about keeping a journal is to keep it simple. You don’t want it to be over complicated because then it becomes too difficult to use daily and you won’t use it.
There are 3 parts to the journal. Pre-trade, during trade, and post-trade.
In the pre-trade entry you’ll want to list the setup, your thesis, position size, risk point, and anything else that goes into your process before you place a trade. During the trade you want to record any changes you may make to the position. Trade management is one of the toughest parts of trading, so it’s important not to skip this. Post trade is where you record the exits, profits, and do a post-mortem on the play.
An extra benefit of this process is that writing down everything you’re going to do before you do it will help you stick to your trade plan. The extra step of writing takes out any impulse decisions that may occur. It’s an extra safeguard.
Writing is also helpful to manage emotions. Writing down how you feel will alleviate those feelings and also clue you into whether or not you should be trading in that state of mind.
For more, make sure you watch the video above.
And as always, stay Fallible out there!