All companies create and maintain journals or trackers to track the progress of their strategic initiatives
or projects. Doctors maintain trackers to plan their day-to-day consultations or surgeries. Lawyers also
do this. Almost every professional maintains some or other kind of tracker/journal for not only tracking
their stuff but also for achieving excellence.
But guess what. When it comes to trading, the picture is a little unclear. Apart from professional traders,
very few retail investors create and maintain trading journals. And the worst part is that most of them
believe that creating journals is a waste of time and effort.
But the truth is otherwise. Since this is extremely important for trading success, let us see the benefits of
creating a trading journal and also some of the common descriptors.
- It helps you fine-tune your strategy
You may have developed a few strategies or setups for your trading, and you might have been working
on them for a long time. But have you ever found out, how well does the strategy work? In which
conditions your strategy does not work? Do you remember your last 10 trades that went wrong?
The obvious answer is No. And that’s precisely the reason we need to maintain a trading journal.
In the journal, you will write what went wrong and what went right, and over a period of time, you
would have developed a huge knowledge base. This will ultimately help you in fine-tuning your strategy. - It makes you disciplined
Now, this has happened to me a lot. I used to note my entries and exits on the chart, but mostly I would
exit prematurely. The reason was simple – I was not disciplined. And the cure was also simple.
Start maintaining a journal. I was forced indirectly to write my planned entry and exit, and whenever I
felt the urge to sell prematurely, I used to look at the journal first.
Believe me, journaling will make you disciplined. - It improves Risk Management
Here also, when you write your entry, exit, and risk per trade, you can find out the total risk for the
position, i.e., you get to know how much you stand to lose if the trade goes wrong. So, when you write
in the journal, it forces you indirectly to optimize your points of entries and exits.
Having seen some of the key benefits, let us see what usually goes into a trading journal. The below list
is not exhaustive, and more parameters can be added as per an individual’s needs.
So, what should we maintain as part of your trading journal?
Date, Instrument
Your setup
Planned Entry and Exit points
Type of Trade (Buy or Sell)
Actual Entry and Exit points
Profit and Loss
Risk Reward ratio
Position size
Final Words
A trading journal is basically a track record of your trades and maintaining it will help you to take your
trading to the next level as it can help you identify the setups where you lose money regularly. Once you
identify your shortcomings, you can try to improve upon them slowly.
Remember that the number one key in trading is discipline and risk management, and fortunately, the
the trading journal helps in improving these aspects massively.
Go ahead and start tracking your trades to realize a better version of yourself.
