If your goal is to become a highly successful Forex trader, then keeping a Forex trading journal is a must have tool for your Forex arsenal.
A journal is a record of events or business. So in essence, if you are treating your Forex trading like a business, then keeping a Forex journal is a no brainer. Journaling, in this case Forex journaling, provides so many benefits. Journaling your trades keeps you disciplined, it tells your Forex story, it helps with the psychology of trading, and it identifies gaps in your strategy.
Keeping a record of your trade, in such detail acts as data entry information of the traded pair. Include information that you feel is important to know about the trade. Start with documenting the time and date of the trade, the pair traded, the price points of all key prices, any reports or announcements that affected the trade and everything that you can think of about the trade. The goal here is to understand the trade in written form.
We all know how helpful a personal journal can be. Have you ever journaled? If so, have you ever picked up one of your old journals and after reading it, you noticed now that some of your behaviors makes much more sense. Or you see patterns playing out in your life. Well that’s exactly how your Forex journal will benefit you. You will begin to see the same good behaviors being repeated over and over, which gives you the opportunity to see where your strengths lie. You will also notice your mistakes and behavior patterns. The tricky thing about pattern behaviors is that its usually unnoticeable because it has become so natural to us that it's a second natured trading habit. Who knows? That one habit may be the secret sauce to your trading style.
Another form of journaling is video journaling. Having many different journaling styles gives you a multi-angled perspective of your trading.
Having a written journal is powerful but also consider having a digital journal. Record your trades on some sort of video software that includes audio. It'll be helpful to be as vocal as possible while you are recording. In reviewing your video journal, you'll soon discover some nuisances that could be damaging to your trading. Take note of things such as vocal inflections, hesitation when entering or exiting a trade and your confidence during the trade.
Why is a Forex journal important?
Well I can 5 give you convincing reasons as to why you must keep a Forex trading journal.
1. Trade Logging: Having information such as pair traded, date and time you entered and exited the trade, type of entry, your emotions before during and after the trade, and any other pertinent information related to the trade serves as a personal record keeping of the hours you are trading.
2. It serves as your business transaction ledger: Once you are out of the trade you can use your journal to review and find your trading strengths and weaknesses. You can identify trends in your trading style. Help pinpoint areas of developments. You will see if you are most successful at trading certain pairs, certain times of day, certain month of the year, certain trends, etc.
3. Trade management: Keeping a Forex Journal acts as your build in management team as it will help you understand if you are following your trading plan to the tee and keep you accountable. One hard-fast rule to trading is to (say it with me) plan your trade and trade your plan. Your journal will reveal how well you follow that rule. Most importantly keeping a Forex trade journal will help with money management.
4. Helps with trading Psychology: once you recognize and understand your behavior you can better understand the reason you engage in such behavior. Journaling is so vital to behavior modification. Want to know why you lost a trade? Review your trade journal. Want to know which pair yields you the best outcome? Review your trading journal. Want to know if you favor longs or shorts? Review your trade journal.
5. Organization: Using a journal to document your Forex trading will help you to be organized. You will have a time and dated record of each and every trade you entered and will be able to track your growth a trader. Having highly organized trades will lead to having highly successful trades.
What should I include in my Forex Trading Journal?
So, your Forex trading journal should include ALL pertinent information regarding your trade. Including but not limited to:
Time and Date of the trade:
Trade Position: Long or Short
Take Profit amount:
Stop Loss amount:
How are you feeling today?
Your journal is basically a set of questions that you answer that covers all aspects of your trade. You know you journal well when you can look back on an older entry and visualize the trade. And when you go back on your trading history you can match the actual written trade history with the visual trade history.
Journaling is another arsenal that a successful Forex trader have in their possession. Successful Forex traders knows that learning from their successes and failures helps them evolve as a trader. Your trading journal is perhaps the most helpful part of your trading plan. Study your journal often. Take notes from your journal, as your trading skill increases become more critical of older journaled trades. Be diligent about journaling. It can be a tedious task but its one of the most helpful ones. Utilizing your trading journal in an effective way can take your trading to the next level.
Tips for a successful Forex Trading Journal...
For journaling to work the trader must:
- Keep a WELL written record of each trade that includes all pertinent information about the trade.
- Keep a recording of your trade, talk through your trade from beginning to end and record every trade if possible, Each trade is a new opportunity to grow!
- Use your journal to review your trades and learn not only the history of the trade but how well you strategy worked.
- Ask the question: What is at least 1 thing I can learn from this trade to improve my odds of gaining?