Trading Journal: Why You Need To Log Your Trading Journey Every While
Today, we are going to talk about one of the most important trading assistants that help to strain you as a better trader, and also accomplish your dream to be a successful trader.
Yes! You guessed it right.
The importance of trading journal is our topic today. A trading journal is a fusion which includes all your trading history and information. You can log your trading journey from day one to the end by using a spreadsheet or other online free journal keeping applications.
Let’s start with a short definition of the trading journal and will see why it is so important to keep.
Introduction To A Trading Journal
A trading journal is a diary/spreadsheet that helps to jot down, crunch, and analyze all trading data of a trader. A well-informed and quality trading journal helps a trader to display his growth and progress as a trader.
It also keeps excellent records of your trades from which you can figure out your profit rate in terms of the trade expenses.
Expert's Opinion On Trading Journal
Experts have achieved the highest level of performance in this industry. Their performance can be objectively measured and compared to the performance of others. So, their views have a great influence on the rest of the traders as well as newcomers.
And you can hardly find any of them involve in trading without journaling their trade experience every day.
Indeed, they acquire their expertise through long periods of hard work and focus on their way of trading. And this helps them to figure out their mistakes and bring significant changes in their trading methodology where needed.
Why You Need To Log Your Trading Journey
A trading journal is a powerful tool which helps you to become more organized and even more successful trader. It’s a tool which works as an assistant the result of which you can see in the long run, only if you consistently keep it for all the time.
Let’s see the reasons why keeping a trading journal is something irreplaceable.
Get Control On Your Emotion:
The trading log helps you to become the master of your emotions. It means that you can control your emotions by constantly following a journal.
Don’t forget to jot down your emotional expressions on a journal every time you trade. Lastly, remove them by finding the bad ones that influence your trades.
Risk Appetite Measurement And Improve Risk Tolerance:
Keeping a trade journal is meaningful as it helps you to measure your risk tolerance and eventually helps to improve it.
To figure it out, you can take notes on the amount of risk you are taking per trade and check how they work out. Based on the results, you can modify your risk in terms of the reward ratios.
Moreover, a trading journal will help you to realize whether the risk-taking has any meaningful outcome afterwards or not. That’s how you can avoid terrible situations.
Gather Information About The Industry:
Generally, in a trading journal, we write down all the important facts about our trades, different significant situations, problems we faced, ways to overcome them etc. Imagine, after years of consistency, how much live data you will get!
Yes, you can gather lots of information about the trading markets and the whole industry. And all this real info you can’t probably get from any source.
Monitor Your Trading:
By keeping a journal, you can monitor your trading methods, the progress of wins or loses case more vividly.
It will tell you which methods are working for you, which strategies can bring you money, and how to progress in overall aspects. It also helps to identify your good trades as well as bad trades.
Leads To Effective Trading:
A trading journal assists you to avoid over-trading. When you keep a journal, you are more likely to avoid trades which are out of your trading plan.
Thus, you can avoid losses by keeping yourself away from impulsive trading.
Steve Clark, a trader and founder of Omni Partners, says,
Do more of what works and less of what doesn’t.
When you write down anything, that means it is important for you, so your focus on it increases. And when you read those points day after day, it unconsciously becomes your regulations. Moreover, it’s a necessary aspect to avoid overtrading or trading misjudgment.
Log your trading journey can also improve your trading mentality. Traders can measure their performance level and also can compare with the previous trading scenario.