Traders often face a wide range of challenges and obstacles in the pursuit of success. One of the most effective ways to overcome some of these challenges and improve your performance as a trader is by keeping a trading journal and making sure you journal everything, from trades to thoughts and feelings.
Back when I started trading, I found a mix of opinions about managing a trading journal.
Some said it’s a waste of time, and all you have to do is watch your balance to see if it is going up or down. Some said you have to journal every single thing you do in the markets religiously to be able to analyze it later.
Anti-journaling club splits into two:
Those who are profitable traders and manage to make money consistently without journaling — well, what if there is something you are doing that just by eliminating/changing it you can boost your profits by xx%?
And those who are not profitable traders who continue losing money regularly and don’t journal — why would you continue doing the same thing every day while you know it is not working? How will you find out what is the issue if you do not track the actions that lead to the bad results?
The truth is that journaling is an essential part of trading and every single trader should do it. By collecting data you know more about what you do right, wrong, or could do much better.
The only reason to not manage a trading journal is laziness.
Sadly, most people don’t journal at all.
The whole aim of journaling is to help you answer three very important questions when it comes to trading:
How can you make more money from your winning trades?
How can you lose less money from your losing trades?
How can you generate more winning trades?-TOM DANTE
Journaling every single trade, and keeping a written record of your thoughts and feelings, is an important practice that can help you reflect on your trading ideas and strategies, and gain new insights. You will be able to track your progress over time and identify patterns in your execution and thinking.
The importance of having a trading journal cannot be overstated. It’s a valuable tool for tracking your progress, identifying patterns, improving your performance, and staying disciplined and focused. Whether you’re just starting as a trader or you’re a seasoned pro, a trading journal can help you achieve your trading goals and improve your performance.
Recommended trading journals:
Google sheets / Microsoft excel — You can always create a journal for yourself with all the info you think matters. There are many journals you can find online such as this one (very basic) that takes 5 minutes to make:
CoinMarketMan.com — is a fully automated crypto-oriented journaling software that collects all the data about your trades from your exchange via a read-only API and presents you with your statistics, trade screenshots, and lots of useful information. The service is either paid for, or you can use their referral link for lifetime free access to their services.
Edgewonk.com — A paid journal that is also manually filled, not crypto-exclusive, and can be used by anyone looking for more in-depth statistics about their trades. Just enter your trade criteria and info and let Edgewonk do the calculations for you.
As you can see in the screenshots, via these services, and google sheets/excel when built properly, you can get a LOT of valuable information. From average trade holding time and its correlation to the success of the trade, knowing what strategies work better for you thus allowing yourself to take these with higher conviction and risk, to even knowing what are the best days of the week or times of the day where you perform best.
Having a loaded journal, packed with past information, won’t show you the future or tell you if you will make money or not, but it will show you what you do better, guide you towards the things that give you positive expected value, so you can do more of it, and what you do worse, what gives you negative expected value, so you can avoid it.
That is the secret to longevity.
Great additions to a trading journal:
Document feelings at the end of the day — Emotions are a powerful thing. It is worth summarising your day in a notepad or a file on your computer, so that later on when you go over your journal if you notice a specific pattern of a day that seems weird, you can go back to that day’s writing and see if maybe there was something that made you go off the norm.
Document your trading day with a live journal — If possible take notes of your trading as you go and trade. This will allow you to see the thinking process that was leading you to take specific trades much better and this will allow you to understand why did you take a certain trade, based on what structure, what pattern, what news, etc.
Use Demon Hunter — Demon Hunter is a document shared by Tom Dante where you can mark off every time you do a mistake you know of, and can’t seem to stop doing again and again. We all have those demons if it’s taking profit too early, or trading out of boredom, etc.
Make a chart like this for yourself, fill in the demons that you are aware of, and make sure to obey the “stop trading” signal if you reach it.
Missing a day to reflect and realize you do something wrong is better rather than doing it all over again the next day only to lose more money/not make what you should’ve.
Good luck, anon!
-Delta.
