How do you keep track in trading?

It's so important to track our trades because sometimes it's hard to pinpoint exactly what went wrong with a trade - or perhaps what went right. So we track every single trade and also make out time to go back to them and review it all

Find a way to keep track of your trades, using technology or even a paper notebook. There’s no one right way to track our trades. Some traders use spreadsheets. At minimum, we want to fill in our entry, exit, comments, PnL and setup. So that when we have time, we can simply review them

Trading is not a video game; it’s an actual job. And keeping careful records helps us identify not only how well we follow our strategy but also ways to refine it. These records can also show us how successful our trading journey has been

After we put our trading strategy to work during the trading day, it’s easy to let the energy and emotion overtake us, that we get sloppy and stop keeping track of what’s happening. That’s not good for this career

As traders, we keep a trading Journal and we don’t get lazy about it!

"The journal functions as a control system"

Definition of a journal

In the accounting world, Journal refers to a book wherein transactions are logged for the very first time. That is why it is also called as “Book of Original Entry”.

In this book, all the regular business transactions are entered sequentially, i.e. as at when they arise. After that, the transactions are posted to the Ledger, in the concerned accounts. When the transactions are recorded in the journal, they are called as Journal Entries {Source}

• However, a bodybuilder has a journal to track his diet, weight, and strength
• A scientist has a journal to track their latest findings and the results of experiments
• A chess master has a journal to record down his plays and his thought process of the game. This is the same for trading!

What is a trading journal?

A trading journal is one of the most effective tools for performance management. It is where we record and review daily trades for better output and for future reference. A journal can help us track progress as well as study mistakes made when entering or exiting a trade. In the long run, these reports can act as the foundation for better executions

Keeping a trading journal is a smart strategy to enhance performance and gain confidence in executions

Success in trading requires a high level of planning and practice. To be consistently successful in trading, traders need to go through a comprehensive learning process and the best tool to guide and optimize a trader’s system is through the use of a trading journal

If we plan on becoming a successful trader through performance, trading journals can steer us faster towards a profitable career

A successful trader does not examine each particular trade, but the progression of their trading performance. Through an effective trading journal, traders are able to hasten the path towards a more disciplined and profitable trading career

By taking advantage of this tool, we can quantify, scrutinize and enhance our trading process. We can thoroughly keep track of our skills, emotional triggers and other aspects of trading that we wish to measure and optimize

With the help of a trading journal, we can have a clear view of our overall performance. Which boosts a trader’s growth as opposed to a trading career without evaluation. The more analysis we make from our trading journal, the better we can adjust our performance for optimal trading

Journaling also allows us to be more accountable for any errors. By acknowledging what we do best or what needs more improvement, we can optimize our trading skills and incorporate them into our trading system

After analysis, examine your performance and plan how you can perform and profit during the next series of trades going forward with your career

What should be included in a trading journal?

Much like a trading strategy, each trader will build their individual journal with information relevant to their style

Most successful traders use an effective trading journal to their advantage. However, here are topics to consider including in our trading journal:

• The date and time of the trade; Each journal entry should include the date and time when a trade has been taken
• The traded instrument; This section describes the financial instrument that has been traded
• The direction of the trade; The trade direction entry can be either buy (long) or sell (short)
• Entry and exit prices; These are three separate fields, reserved for the entry price, stop-loss level and take-profit level
• Position sizes; In order to determine whether our position sizes meet the requirements of our risk management rules, we need to enter the position size for each trade we take. This field will help us later during journal retrospectives to analyse whether we took too much risk on our trades
• The result of the trade once it’s closed; The final mandatory field of a trading journal is the result of the trade. Simply add the profit or loss in USD terms (or another currency in which your trading account is denominated)

Besides these elements, a well-designed trading journal should include additional information as well. Those additional entries will help us keep track of our trading improvements and make it easier to analyse our performance

• Market commentary; This section is to point out the mistakes we actually made during a trade, lessons learnt & observations. It’s the one most important section that we must come back to and reference. Especially as traders trying to be consistent in the market. Because we’ll want to make sure we NEVER make those mistakes again & we’ll want to apply all we learned & observed as we go forward
• Reasons for taking a trade; In this section, we can describe the reasons why we’ve taken a trade, including fundamentals and technicals. For instance, if we’ve taken a trade because it reached confluence support of a channel and trendline, and candlestick patterns show that the technical level holds, you can write this information in a bullet-point format into the section
• Charts; Pictures tell a thousand words. Adding a price-chart to our trading journal for each trade will make our life easier once we start to analyse our journal entries in order to improve our trading strategy

You can add any other field that you consider important in evaluating your trading performance. It doesn’t have to be too complicated or super basic either. It’s too easy to think that we’re immune to our emotions - but no one is. Especially when money is involved

What is the best trading journal?

While having a trading journal in a spreadsheet will help you a lot, some traders keep their journals in an old-school notebook

But whether we keep our trading journal on a computer or in paper format, the real value of it comes from making regular retrospectives of our journal informations. Trying to identify recurring patterns of losing trades, reading through the commentaries and other fields to find clues on how to avoid the same mistakes & make improvements in the future;

• Did we let emotions get in the way of letting our trades run further?
• Was there more money to be made but we didn’t get it because we shutdown trades too early?
• Did we take a loss because we traded right into big news events and the news didn’t go our way?
• Did we ignored one of our indicators?
• Was our stop-loss too tight?
• Did we enter a trade without our specified edge present?
• Or did we take a trade with a trend following strategy in a range bound market?

Whatever the mistakes, try to improve your trading strategy accordingly

If we’re looking forward to improving our trading performance, keeping a trading journal is a great way to start. It’s the key to staying consistent. It provides valuable insights into our trading strategy and performance, especially if we make regular reviews of our journal entries to find recurring patterns that lead to losing trades

“We simply just need to form the habit of entering a journal as soon as we take a trade”

If your trading style is so fast that you don’t have time to fill out your journal, that means you’re trading a style that doesn’t suit your personality and perhaps level of emotional tolerance

I don’t know if I stressed the importance of keeping a journal enough but make sure to come up with some kind of way that lets you keep track of trades made based on a signal from your system, trades based on your own hunches, and trades based on other interpretations of market conditions - keep a trading journal!!!

Trading is a BUSINESS - Treat it as such!!