What are the Benefits of Keeping a Trading Journal?

A journal is another word for a diary. Writing in a diary each day might not seem all that relevant to a forex trader, but it can be surprisingly useful. A trading journal has many benefits for traders working alone, i.e. at home, away from a busy trading floor.

Not everyone who trades on the currency markets works for a financial institution. Most trade from home in their spare time. As a lone trader, you don’t have the benefit of fellow traders nearby, with whom you can share ideas, trading strategies, and tips. Instead, you have to self-coach and learn from your mistakes.

There are many forex trading resources out there, including online courses, trading blogs, and YouTube videos. If you are serious about your trading activities, you can even sign up for a coaching course. However, maintaining a trading journal offers some useful insights into your trading activities.

Greater Insight into Your Trading Activities

Think of a trading journal as a way to review your trading activities. By keeping detailed records of your trades, you can spot patterns, good and bad, and learn from what you do right or wrong. Forex traders are rarely successful when they make random decisions with no forethought or analysis. This way lies defeat. Keeping a trading journal forces you to think more closely about your decisions. It gives you the bigger picture. Whether you are trading in bitcoin or JPY pairs, analyzing your activity via a trading journal could mean the difference between success and failure.

Use a trading journal to track and review every trade you make. No detail is too small, although you may want to refrain from discussing what you dreamed the previous night. Write down each trade you make, and also trades you decide not to make. Discuss the reasoning behind your decision, dates, times, and prices. Because the process of writing it all down forces you to think about the trade in greater detail, it prevents you from making spur of the moment decisions that could potentially be disastrous.

Learn from Your Trades

A trading journal is all part of your trading journey. Think of your journal as a tool. Whether a trade is successful or not, use your notes to keep track of everything you do. It is a great way of monitoring a trading strategy. Set goals and use a trading journal to monitor your progress towards those goals.

Experienced traders also find that a trading journal helps them to process the day’s events, good and bad. If you had a great day, record your successes and look back at the analysis that took you to that sweet spot. Conversely, if it all went pear-shaped, use your journal to dissect what went wrong.

Creating a Trading Journal

A journal is a personal thing, so do what feels the most comfortable to you. Some traders prefer writing in a notebook; others would rather stick to a software program or even a blog. It’s entirely up to you, but whatever you do, don’t underestimate the advantages of a trading journal.