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It is no secret that about 80% of traders lose money in the stock market, 10% breakeven, and 10% make money consistently. With the odds being against you, how do you, the trader, give you better odds?
The best way a trader succeeds in the market is to find their best trading strategy. With so many trading strategies out there, you’ll need to journal all the trades.
Journaling your trades will give a you history log of all the failed and successful trades you’ve had. By journaling your trades it will give you an upper advantage to achieving your trading goals.
A trading journal is a simple document that has a history of your past trades.
Imagine your a bodybuilder, and you write down on a piece of paper – or phone nowadays – what exercises you did for the day, with what weight, and how many reps. This information will help you know what weight and rep range you should be doing next you do the same exercises.
The last thing the bodybuilder wants to do, is go backwards in progress. In the end, this document will help the bodybuilder continue to progress on his muscle building journey because he has data to backup every single set.
A trading journal is like that piece of document. You can track what ticker you traded, at what price you entered, at what price you exited, and the strategy that you executed… and maybe right down extra notes such as what went wrong, how your emotions were, etc.
By the way: A lot of professional traders, such as Warren Buffet, and Ray Dalio also make it a routine to journal down their trades and investments.
Just like the bodybuilder who reviews his gym journal, you’ll the same with your trading journal.
It’s important to review all the trades you took at the end of a trading day. Try to find good and bad patterns that happen often.
Find what best trading strategies work for you, what days, and what ticker. This is important because it will help the trader focus on what’s important, making consistent money.
Just as it’s important to find what’s working for you, it’s even more important to find bad recurring trading habits or behaviors.
That’s how trading journals work, review your trade, and prevent mistakes. Cool.
You can start a trading journal in many ways, but it really doesn’t need to be very complicated. Here’s a quick getting-started guide.
The most important part of this process is to be consistent, honest, and discipline. Just like brushing your teeth, make it a habit to record every trade, analyze your trades, and make adjustments based on your research.
A lot of traders like to use a notebook, an Excel spreadsheet or a trading journal app like Lemonade Trade.
Your trading journal doesn’t have to be overly-complicated. Start by journaling down the basic details of your trade such as:
Make sure to add notes such as what trading strategy did you take, any emotions that you went through, and any other thoughts that came to mind during it.
After you’ve logged in some trading records on your trading journal, go over them. See if you can spot any good and bad patterns. It’s important to be aware of what mistakes you keep making, and what good strategies are working in your favor.
The more you can identify these behaviors, the better trading decisions you’ll make as a trader.
Now that you’ve analyzed your trading journal and discovered good and bad habits, it’s time to make the adjustment for the next trading session.
Yup…Consistency is important, so do it all over again.
There are a number of different ways to journal down their trades–with varying degrees of difficulty. Below, we outline the most common methods.
Just remember: No matter how you journal your trade, writing down your trades and reviewing is the key to making money consistently in the stock market.
A trading journal offers you data, and a action plan. Trading is a business and it must be treated as one. Without data, and no action plan, it’s difficult to be successful at trading. The more you journal your trades and identify underlying problems the more consistent you will be making money in the stock market.
The answer is, after every trading day. It’s important that your trading journal is up to date with details since everything is still fresh your head.
Just like it’s mentioned above, a trading journal will help traders identify patterns and learn from their mistakes. A trading journal will also help improve the traders performance, and discipline and consistency over time.