A forex trading journal will vary from person to person, trader to trader. In light of all our individual differences, there are some items which we should all be sure to record in a trading journal.
These are:
- Why you entered the trade
- The size of your trade
- Your exit plans, including stop loss levels and take profits
- How you feel about the trade.
- How the trade worked out.
All trading journals should include a quick reference as to why you entered the trade. By recording why you decided to buy and sell, you’ll accumulate many data-points which can confirm that a trading strategy is profitable.
How you feel about the trade is also very important. New traders have a tendency to trade with their emotions, using how they “feel” to govern their trades more so than how their trading plan says to trade. Documenting your feelings into a trading plan will allow you to look back and see that you might have felt bad about a trade before, but it worked out fine. Or maybe a trade was looking really promising and so you added to it, only to find that it eventually hit your stop loss.
Size, exit plans, and how the trade worked out help you evaluate what is missing in your strategy. Maybe you have taken too much risk with your position size, and might find that a small position size will keep you loyal to your strategy.
In the next article, we’ll focus on valuable questions you should ask after you have built up a solid trading journal. Asking yourself these questions will help you analyze each success and failure.
