The main reason you want to journal your trades is to track your performance. When you look back on them, you’ll hopefully be able to see subtle clues that can help you alter your strategy. There are a set of categories that you need to include in your trading journal. You’ll need to record the instrument being traded, the size of the position, and whether you went long or short. The entry and exit points are also a must-have. Of course, you want to know if you want or lost the trade. Usually, people want to record the date and time of the trade as well.
Anyone can replicate that formula rather easily. One of the best ways to record all of this is to use a spreadsheet. Using a spreadsheet, though, isn’t necessarily going to make you journal your trades like a pro. What truly matters in journaling is reading that information back at a later date. One of the biggest problems that traders face is that it’s hard to adjust a strategy on the fly. In fact, it may not be a great idea to do so. Even if it’s been a bad day at the office, you usually still be better off sticking to the plan you drew up in the morning.
This is where learning how to journal your trades becomes more important. In the heat of the moment, you may not be able to spot the mistakes that you made in your entry points. As mentioned, going back and doing so right after a loss may not even be feasible. The market’s still going, and you may need to get back on the horse quickly instead of licking your wounds. If you keep a trade journal, you can always go back after the market’s closed, or you’ve exited all of your positions for the day.
One of the key things that people miss when looking into how to journal their trades is the side note section. Sometimes, the numbers don’t tell the full story of a trade by themselves. You could’ve drawn up a perfect plan to trade Tesla stock, for example. While you’re putting your strategy to the test, Elon Musk puts out a tweet, and the price goes wild! The same thing happens when Jerome Powell steps up to a podium. Other types of news can alter the price of specific stocks, seemingly out of the blue.
Since these things can happen, it’s a good idea to have an extra space to jot these incidents down. You can also talk about what you saw or what you were feeling when you were going through the trade. This extra space can be key in how you journal your trades. When you go back and read your journal, this area can give you insight into external factors or even your own mental state while trading! On a more technical level, a good journal can also let you know if you’re having trouble with a particular stock. Sometimes, you may not be able to adjust to a specific stock for whatever reason. There’s no shame in looking for other options.
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