In continuation from the previous article, we have so far identified the reason for traders to maintain a trading journal and also how to correctly or appropriately log entries to your trading journal.
In this article, we take a look at how a trade journal can help you to improve in your overall trading performance and also some tools that can help you to stay on the right path towards your success in forex trading.
The importance of tagging your trade entries
When you journal your entries, regardless of whether the trade was successful or a failed on, always ensure to tag them based on their results and your opinion of them.
For example, winning trades could be tagged as “A+” or “winners” or so on based on how good the trade performed. It is important to stress on this point because a 10 pip winning trade is not the same as winning 50 or 100 pips on a trade. Therefore, tag your trade based on their overall performance.
Traders should also tag their journal entries with some keywords as well. For example, if you trade with moving averages, tag the entry with MA Crossover, or if you use oscillators such as the RSI, then make sure to tag them as RSI14. This again, often overlooked element can help in the long run when you want to look back on your trades.
By tagging your trades correctly, over time you will start to realize what indicators or trading analysis tools work best for you.
What can you learn from your trade journal?
Avoid trade set ups that constantly keep losing money for you. At the same time, identify and focus on the best trade set ups that make money for you. The idea is to ignore the weaker trading set ups while at the same time focusing and improving on your best trade set ups.
This allows you to mentally build your trading psyche as well. The more you archive/look back and research into your post trade analysis, the better your mind gets at automatically identifying the variables involved and starts giving you the ‘mental signal’ to a possible trade set up.
A trade journal also helps you to better see how your trade set up works in different trading conditions.
Remember, in the previous article, under the section of How to log entries, we mentioned that you should also write up on your brief view of the markets?
Well, this small subtitle can help you better understand whether your trade setup works in a trending market or in a ranging market or if it is better used to trade news events and so on.
As can you see by now, the trade journal starts to make more and more sense as it becomes your crutch to fall back on, especially when you are uncertain about a set up or if you see a trade fail.
Making a note of fundamentals helps you to stay alert to similar conditions. It maybe that without your knowing, your trading systems works best when there is no news, or perhaps your trading system works during volatile and major news days. Without a trading journal, such vital information is missing!
Trading Journals – Tools
Here are a collection of some tools that are both free and paid which helps to make it much easier to build your trading journal.
Evernote, Office OneNote, Blogging platform: Whether you want to use a standalone desktop application or a web based app, the above mentioned tools can help you to take quick notes, copy paste charts easily and help you follow your journal template. You could also use Outlook 365 or Google online tools to journal your trades.
Fx Analytics: Sites such as Myfxbook, Fxjunction are free to use analytics website that can help you to gain far better insights into your trade. For example, when you check on your ‘Trade History’ sites such as Myfxbook also shows you a snapshot such as hours in trade, entry and exit accuracy and a 5 minute chart showing your entry, stop and target levels. Besides these, you can also view your Risk/Reward ratio, the amount of time your trade was running in a loss below you stop levels and so on.
Screen grabbers: While most windows and MAC systems do have inbuilt screenshot captures, most of the trading platform also allow you to quickly take a screenshot of your charts (giving you the option to also post it online besides saving the image on your desktop). If these aren’t enough, you can always use various free online tools such as screenshot.net that allow you to capture screenshots and add your own annotations as well.
Now that we have a fair idea of the importance of using a trading journal, along with exploring a few tools that can be used to build a trading journal, we will conclude this article with a simple template for you to follow.
Trade Journal Template
- Currency Pair – Date – Timeframe
- Your Entry, Stops and take profit levels
- Chart snapshot
- Indicators used
- Fundamental news (how was the day, any news events before/during your trade was triggered)
- Your analysis on why the trade worked
- How could you improve the trade (did you exit too early? Could you have used a better stop loss?)
To conclude, a trading journal doesn’t simply end after you log your entries. Traders should often look back and read on their trade archives so that your mind automatically remembers the market conditions and alerts you as and when such trading opportunities arrive.