Crucial to improving performance

There is no better aid to future performance than to keep a journal of your trading performance.

It is a matter of personal preference what is kept in a journal but there are a number of templates available online that will provide the basics.

Trading journal

A simple table of past trades is all that is needed although more sophisticated ones can contain market reaction to certain events.

The basic information to consider including is:

• Currency Pair
• Date and time of trade
• Position size
• Stop Loss and Take Profit in pips. Monetary value can be misleading. Using pips provides a constant gauge.
• Short description of strategy. This can be abbreviated using a coding system.
• Description of confidence in position. 1-10 is a good way of measuring
• Short management plan.

We can describe many of these things by putting them on the chart Saving screen from the moment of opening position is also very good method to come back in the future and analyse our decision again.

What is also worth saving in form of description and screenshot is our thinking process and position management during the trade.

Example

Phase I – opening order

Complete the journal with a many of the points from the above list as you deem necessary. A screenshot is a good idea.

Phase II – position management

Every change to the position is recorded. Record the reason for raising the stop loss or any other order change. It will help with future understanding of your rationale.

Phase III – close of the position

Record whether you were stopped out or took profit. If an order wasn’t triggered, what made you close the position.

Phase IV – verification

Was the reason for opening and closing the position valid. Compare to other trades. Building a picture in your mind will enable validation of your trading methodology.

A trading journal is a great tool for education, validation and analysis. Don’t spend too much time, particularly analysing loss making trades. The concern is that over-analysis will lead to an over-cautious approach. Trust what you see and use the journal in a positive manner.

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What will you earn?

Firstly, this way you will remember former behaviour, thanks to that you will remember what to do in the future in similar conditions.

Secondly, you will find your mistakes and verify if previous analysis was correct or maybe you can improve something in the future. We can get rid of one of the biggest mistakes – we can eliminate or reduce wrong opening positions or the position management.

We can reduce too quick securing of our transaction which can lead to hitting Stop Losses too often or too early closing positons when the market is going in direction we predicted.