Knowing is half the battle. This quote undoubtedly applies the most to forex trading because traders will know what wrong strategy or outlook was used when entering/exiting a trade. This knowledge leads to trading technique and strategy adjustment which not only improves overall trading but also helps identify when not to enter a trade. Expert traders often keep a trade journal to scribble down everything learnt about a trade and how mistakes could have been avoided – you can do the same.
Does Keeping A Trade Journal Really Help?
A trade journal contains news and other items of interest that concern a particular trade. But how effective is this practice when it comes to improving actual trade? Much has been said about how important it is to master your trading psychology. Perhaps the most effective and practical way of achieving this goal is by keeping a trade journal! If used properly, traders can accurately track their behavioral tendencies, their most used strategies and resulting outcomes.
Keep a trade journal but can’t derive any use from it? Follow the points mentioned below:
Balance Negatives and Positives of Your Trading Strategy
It’s human nature to see and point out flaws and negative things that happened during the day, rather than focus on the positives. Similarly it’s common for traders to write down what went wrong in trading or what opportunity was missed especially when writing about a losing trade. Following this pattern when making entries on your forex trade journal won’t help at all but show your incompetence and failures in trading.
Expert traders believe in writing down the good and bad i.e. adding what you did wrong and what should have been done along with strategies working for you.
Understand Market Structure for That Particular Trade Day
Even basic understanding of market structure will help traders analyze and compare different conditions with used strategies, to come up with an accurate outline for future reference. It’s important to understand market structure not just in general but for that particular trading day! This will promote effective and informed trade placements on trending lines as well as let you know which patterns work best on what market structure.
Begin Your Trade Journal with Help from This Template
Don’t know what to actually record on the trade journal? Your journal should contain:
- Currency pair – date – timeframe
- Your trade entry, stops and take profit levels
- Snapshot of the chart
- Used indicators
- Fundamental news that affect trading markets
- Result and analysis on why trade was successful
- Conclusion notes on how your trade can be
In conclusion… trade journals should be opened and looked at, after recording entries as much as possible. This way your mind will retain how different strategies and techniques worked under certain market conditions. How will that help? You will be alerted when the same market conditions make a comeback and this time, you are ready to grasp trading opportunities! Find helpful tips on how to update your forex trade journal, from fellow traders on the AlpsSocial community!