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Why Keeping a Trading Journal Matters According to Stock and Forex Traders

Posted by Fullerton Markets on April 13, 2021 at 3:28 PM


We’ve asked several traders, both stock and Forex traders:

  • Do you keep a trading journal? 
  • What data do you record/document? 
  • How does journalling your trades help you in any way? 

The response is quite an eye-opener.

First off...why?

The reason we ran a survey is to gauge the value of keeping a trading journal. It comes highly recommended in many online resources but do traders actually follow this advice? If they do, why and how does it help them? 

So we asked members of different trading groups on Facebook and other online communities for their honest opinion and personal experience.

Do traders actually journal their trades?

All of our respondents keep a journal. 

While some of them might view a trade journal as merely a way to record certain metrics, others take the process to the next level. This is because doing so provides them with more than just higher profitability and positive outcomes.

What trade entries do you record?

Different traders record different data on their journal. 

Based on responses we've gathered, one journal can have up to 27 trade entries. The most common data recorded are: 

  • Entry date
  • Entry price
  • Exit date
  • Exit price
  • Timeframe
  • Profit/Loss

Stock traders also record the number of shares bought and sold and the percentage of profit or loss made.

The more comprehensive trading diaries include: 

  • Currency pair
  • Lot size
  • Strategy/Candlestick pattern used
  • Average buying price
  • Stop-loss (SL)
  • Target profit
  • Ticker symbol
  • Gross buying amount
  • Gross sale amount
  • Fees/charges
  • Sales fees
  • Net sales
  • Percentage of gain/loss
  • Amount of gain/loss
  • Sales tax
  • Stock code and/or name
  • Number of shares bought/sold
  • Status of trade (pending order market entry, SL moved to reduce risk, SL moved to breakeven, SL moved to profit, etc.)

The most comprehensive trading journal also documents the less-acknowledged yet most important part of trading--emotions. Traders record what emotions were involved in a specific trade or what they felt about their trading decisions before and after they made them.

According to them, doing so helps them stay on track, stay true to their trading plan, and avoid the cycle of switching from one strategy to another based on market movements and trade outcomes. 

Some traders also leave comments and take note of mistakes to correct or lessons learned during the trade as well as corrective measures taken, if any. A few other traders even include in their journals what movies they watched while trading.

Why is it important to keep a trading journal?

images showing the different benefits of using a trading journal

A common response among respondents is that they maintain a trade journal/diary to track the price at which their strategy hits and the number of times their trading plan succeeded and failed. 

This helps them get a clear view on whether to stick to the same strategy or develop a new one based on the data they've collected over a course of a certain period. 

This is also a great solution to help you deal with a losing streak when trading Forex. If you record all multiple losses, you'll be able to see a pattern that you can adjust, correct, or avoid. 

There are more benefits to journalling your trades, however. 

  • You can create a profitable framework based on historical trading data. This can help determine the success of your plan and prevent future mishaps.  
  • You can control how you react/respond to the markets or trading outcomes because your experience will tell you how certain emotions can impact/trigger certain decisions. If you record what you feel with every trading activity, you will develop a winning psychological and mental state. 
  • You can better analyse your trades and adjust them for optimal performance. Examine the data you collect at the end of each trading day and plan for a more profitable trading session the next day. 
  • Your trading journals can help you stay disciplined, especially in sticking to your trading SOPs. After all, you have a record of what works and what fails. 

Most importantly, journalling your trades helps you steer clear of a questionable trade. Why risk your account on baseless moves or decisions? If you have concrete data available, every trading decision you make has solid and sound backing. 

Get to know the 5 Destructive Traders and What You Can Do to Not Become Them

Do you journal your trades manually or use specific tools?

Most of our respondents start with using an Excel spreadsheet to maintain a trading diary for the primary reason that adding or removing entries are easier. Google Sheets has also made this more accessible and convenient to use. 

While others stick to this app throughout their trading journey, others upgrade to an enhanced version of an Excel spreadsheet or use online tools. 

AAES-PSE Trading Log

This is a stock trading journal that uses a pre-filled Excel spreadsheet. It has a different sheet for Trade Log, Stock Position, Monthly Report, Bank Transfers and Dividends. 

Each sheet has entries that you need to fill such as Entry Date, Stock Code, and Action under the Trading Log column. The data you provide is then automatically calculated based on the formula set. 

Pltrades

This is an online tool that not only records and analyses your trading performance but also allows you to document your emotions upon entry and exit. You can also add notes and customise your journal according to different broker fees. 

AOL Trades and  Analytics

This is a free trading journal for traders in the Philippines. It comes with features designed to help a trader become more consistent and profitable. These include an interactive and dynamic dashboard, multiple tranches of entries for entry and exit data, and an AI trading advisor. 

Two other trading journals to explore are: 

TraderSync 

TraderSync comes with a range of tools to support Forex, stocks, options, and futures trading. One of its basic features is Trade Journaling where you can manually enter trades or upload screenshots of price charts that are automatically annotated. It has a customisable dashboard and trade evaluator and simulator, among other functionalities. 

Tradervue 

Tradervue is what most professional traders use, probably because it has a bit of a learning curve. It supports over 70 brokers and, if your broker is one of them, you can directly import your trading history from your broker to the platform. 

Think of journalling your trades as similar to reviewing a film. You watch the movie with a critical eye, looking out for certain points that need to be discussed such as the plot, the beginning and the end. Once the credits roll, you start writing down your notes, including how the film can be tweaked to better entertain and engage the audience. 

In the case of trading journals, the audience is you and you need to create a narrative where you come out as a consistently profitable trader. 

What other entries should a trading journal have? How else can a journal help in your trading journey?

 

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