How keeping track of your moves will improve your trading
If you’re here I assume you read one of my earliest posts, Required Reading: Trading for a Living, and therefore already know what a trading journal is. If not, go back and check out that book before you dive into trading. It’s also worth noting this isn’t just for stocks, a trading journal should be kept for crypto trading as well!
What is a Trading Journal?
A trading journal is essentially a log book of all your trades where you keep notes such as:
- Entry and Exit Prices and dates
- Targets and Stop Losses
- Profits and Losses on the trade
- Screenshots of the charts at entry and exit points
- Notes about why you entered or exited the trade
- Concerns about the trade
- How you found the trade
- Any research or info about the company i.e. Morningstar rating, upcoming product launches, earnings reports, etc…
These are just suggestions of items to track in your trading journal. It’s important to customize yours to fit your trading plan and what will help you learn from your previous mistakes and victories.
Why keep a Trading Journal?
So why keep a trading journal? Doesn’t my brokerage site keep track of all my trades for me? Why waste my time when I could be out trading?!!
If you’ve been trading this way before you’ll mostly likely have one or more trades where a few days after you bought it you’re now thinking “Why the hell did I buy this stock?” Don’t worry it’s happened to all of us. You FOMO in for one reason or another without a clear plan and it usually ends in a loss. But with a trading journal you’ll never be left wondering “WHY?” anymore.
All the reasons above are why you want to keep a trading journal. One of the most important elements, like a regular journal or diary, is your mindset. What were you thinking, what were your goals, and what factored into your decision to enter the trade. This will now only help you remember what you were thinking at the time but also make you sit and think about these things before you enter the trade.
A trading journal will also serve as a “post-game analysis” of sorts. You’ll get to see what went right, what went wrong, and how you can improve in your trading. This is why the more info you can include, the better it will help in the long run when you go back to revisit old trades.
As I‘ve mentioned before, the longer you trade, the more you’ll start to learn the patterns of individual stocks. Remember, price has memory! This is why keeping a log can turn one success into multiple! A stock you previously had a gain on might setup in a similar fashion which is a sign that a trade might be worth entering again. Conversely, it can also help you from repeating a past mistake if that stock’s behavior lead to a loss.
What Does A Trading Journal Look Like?
A trading journal can take many forms, but I’ll show a few examples but it’s up to you to find or make one that best suits your needs and style. For some it may be a handwritten notebook, some might want a detailed Excel spreadsheet, while others might want to pay for specialized software.
In “Trading For a Living” Alexander Elders talks about keeping a journal in a notebook and utilizing the two page layout. The LEFT page is all the info about when you entered the trade, and the RIGHT page is the info when you exited the trade. He recommends pasting in an image of the chart from those days on each page so you can easily go back and see all the info as it was on the day.
FREE PAPER TRADING JOURNAL TEMPLATE
I threw together this quick example based on Elders’ suggested journal style:
(click File>Make Copy to save to your Google Sheets account)
NOTE: I put this together real quick for this post so double check all the formulas and customize it based on your own preferences. I suggest only using this for paper trades until you’re happy with how it looks/works.
Here are a few template examples I found with a quick Google search:
And here’s a How-To video from Disciplined Trader who also has free course on keeping a trading journal.
*NOTE: You can import his free Excel sheet into Google Sheets if you don’t have Excel.
As you can see, there’s no right or wrong way to keep a trading journal, it’s just a matter of finding/making one that is right for YOU. The important thing as that you keep one. It will help you get a better sense of what you did right or wrong, track patterns/behaviors of stocks, and make you think a trade through before executing.
Hopefully you found this quick little post helpful. Tag @SpockTradez in a Tweet and show me how you keep track of your trades!
Trade long and prosper!
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