How to Create a Trading Journal To Save Your Trading Career

If you have been trading for a while but couldn’t have found an established trading system for yourself, you are not alone!

It happens to many traders that after even a long time, they get confused with all sorts of different strategies and trading plans. They jump from one strategy to another as they don’t know what they’re exactly doing  

They get FRUSTRATED and CONFUSED…

Eventually, many traders give up trading for these sorts of feelings…

If you are one of them…Or if you want to turn your stock trading into a decent and profitable career you need to have a TRADING JOURNAL. 

Trading journal will help you to be clearer with your strategy and trading system and let you to analyze and manage your trades better.

This post will help you if you:

• don’t know what a trading journal is
• have a journal but you think it’s not helpful
• have never considered having one for yourself

Why is journaling helpful?

I have been journaling most of my life and by journaling, I mean writing down how my day was, what emotions I had during the day or what happened specifically in the day.

This is probably one of the best things I have ever done for myself. It helped me to know myself in many ways.

This is the same with trading journal which help us to know our strength, weakness and overall performance in the market better.

Trading journal is basically a journal includes all of your trades, the reason why you did them, your mistakes and lessons.

Also when you write your brain works differently. 

Writing is good for keeping our gray matter sharp and may even influence how we think, as studies show. 

Trading Journal is your best Trading Mentor

Whether you have a mentor, coach, and instructor or not, in the end this is you who is the key person to your SUCCESS.

You can learn a lot from your own experiences. Your failure is your best teacher. 

With that being said, a trading journal will help you to gather all the information about how you are doing in the market….how you decide about a trade…what is your biggest obstacle for being a successful trader… how you are progressing in your career. 

It helps you to transfer all the calculations in your mind to a paper (or computer/cellphone).

A trading journal is a mirror of what you normally can’t see clearly. 

You can have a digital version of it or use paper and pen ( I personally prefer a pen and pencil ), whatever works better for you.

If you are wondering how you can get the best out of your trading journal, hopefully by the end of this post you have an answer. 

What Should Be Included In a Trading Journal

You’d better write down all the information about your trades in your journal daily. Then at the end of each month evaluate what you have done in the month. 

Here is some suggestions that you might want to include in your trading journal: 

• Name of the Share
• Entry point (date & price): When you took the trade and what was the price of the share then. 
• Exit point (date & price): When you closed the position . At what price you sold you long position or bought to cover the stock you have shorted. 
• Stop Loss : At what price you will exit the trade with a loss. (The maximum amount you let the share move before you close the position)
• Profit Target: At what price you are planning to take the profit. (If you are going to take a partial profit at multiple steps include all of them in your journal)
• Return of the trade ($).  How much you earned (+) or lost (-) from this trade.
• Return of the trade (%): This earning is how many percent of your original capital . For example, if your original capital was $10000 and you earned $100, then your overall earning will be 100/10000= %1.

Some additional comments to include: 

• Why did you take the trade? What signals you observed?
• Did you take the trade based on your strategy? Was it a random or emotional trade?
• What have you learned from this trade?
• Do you have any regret?
• Are you planning to trade differently next time? How?
• What was your biggest mistake?

Once you write down all of the information daily , you can evaluate your performance and your trading psychology at the end of the month.

Key takeaways from the end of the month evaluation :

• Overall return of the month in dollar and percent wise
• Winning rate (%): how many percent of your trades was winner trades
• Your mistakes and lessons for the future trades

All this information is necessary for establishing your trading system which is the key step for your success in the stock market.

Know Your Obstacles

I know it is easier said than done. It’s not easy to sit down and journal all of your trades. It requires self- discipline .

You might lose your motivation sometimes or fail many times. Or might experience your losing streak (uninterrupted series of losing trades) and want to give up journaling for a while.

You might experience all of these. ANYONE DOES.

Then, what is the difference between traders?

Difference is in how they stand up after each failure. 

The difference is in how they stick to their rules even with all the negative emotions and thoughts.

Be prepared for having all the negative emotions that can prevent you from sticking to your rules… You might think ” this journaling is not helping and you are not gonna waste your time for it” or think ” I can spend such a huge amount of time on developing my strategy instead”.

I know it take a lot of your time, but believe me, nothing like a trading journal can give you a clear understanding of how you are doing in the market .

This is important to understand that you need to assign time for various tasks. Time-management and self-discipline can help you so much in this career.

If you really want to this works for you , truly want to make a living from the stock market, or any other type of market , you need to be self-disciplined. 

You need to spend some time daily to analyze what you have done. You must know how your performance is and what your weaknesses and strengths are.

Perfectionism is The Enemy Of Your Progress

Sometimes we feel that we need to do things completely or if you want to be a really successful trader you need to do your tasks perfectly.

Well, this is very far from the truth. 

There is not such a thing as a perfect job, perfect person or perfect things in the world. 

This mindset not only won’t help you to progress in your trading but this would be one of your biggest obstacles in your way. 

It’s OK if you forgot to write last week’s trades for example, or lose your motivation. it’s OK if you haven’t written for a while, just try to continue journaling from wherever you left off.

Final Words

I hope this blogpost has helped you to get motivation for having your trading journal and gave you some ideas to what to include in your journal.

If you spend some times on journaling your trades and write down all the helpful information, you can evaluate your performance better. Then I can assure you that your trading journal will help you to understand your obstacles better and be a more successful trader.