A key tool most successful traders use is a Trading Journal. The reason we keep journals is so we can easily go back and review past trades and figure out what went right, what went wrong, and attempt to figure out why.Trading journals help traders track their trades and thoughts throughout the day.
Most traders mark up their charts throughout the day, drawing lines and marking indicator levels which help determine the trend and find possible reversal/target points. The chart shows the exact market conditions being traded. Intraday analyses can show your perception of the market that day — something words in a trading journal never could describe as well.
A picture is an easy way to keep a trading journal, but you must include certain things to make it useful when you look back at it for review.
How to mark on your charts
These basic guidelines for marking up your charts will make them useful for future reference.
Include an hour or two of price action before you begin trading, if applicable. This provides a context for what was happening when you started trading. You don’t need to include price action from the prior day. Doing this can help you better assess time frames to watch while trading.
Mark your start time with a vertical line or text note on the chart. It lets you know if you started trading early or late, and/or why you may have missed some trade signals earlier in the day.
Write down the times of major economic events you will be stepping aside for. When that time comes around, make a note again that you weren’t trading because of news.
Make text notes throughout the day about tendencies and market conditions you notice. If you make an error, make a note of it. If you miss a trade, make a note of it.
Keep as many trendlines and drawings on your chart as possible, assuming they don’t distract you. They help to show your future self how you were seeing the market in real time at any given moment.
Mark when you stop trading for the day with a vertical line or text note.
Type how many trades you made, how many winners, the total profit for winning trades, how many losers, the total loss for losing trades, and the net result. Avoid using dollars, which fluctuate based on position size. Instead, use pips for forex, cents for stocks, or ticks/points for futures.
For example, if trading the ES Futures contract, instead of writing “4 winners, $400; 4 losers, $200 = net +$200,” write “4 winners, 8 points; 4 losers, 4 points = net +4 points.”
At the end of the trading day take a screenshot of your chart and paste it into a photo editor. It should include all the information above. If you can’t see everything on one chart, take two or three shots and save them separately.
Save each day with the date as its file name, and keep them in trading folder saved to an easily accessible location on your computer or in the cloud. Create subfolders for each year and month to make the files more easily searchable.
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You must have a trading journal because it helps you find your edge, identify your strength & weakness, and improve your trading results.
A trading journal can be split into 3 parts: before, during, and after the trade.
Before the trade:
This is where you analyze the markets for potential trading setups so you don’t miss trading opportunities.
During and after the trade:
This is where you record the relevant data so you can review them and find ways to improve on it.
Now, if you can do this consistently, your trading results will get better. And before you know it, you are already a consistently profitable trader.
At the end of each week and month, go back and see what you did, notice common problems, and spot your strengths