Are You Keeping A Trading Journal?

After all these years, I am still involved in the process of self-discovery.  It’s better to explore life and make mistakes than to play it safe.  Mistakes are part of the dues one pays for a full life. 

– Sophia Loren


One of the most important things that you need to do is keep a personalized trading journal.  When you go about the task of documenting your work; you speed up your learning curve. Keeping a detailed history of your successes and failures will help you to analyze where you’ve been and where you’re going.  Most mentors and most institutions will recognize the value of a trading journal and recommend that you keep one.


A trading journal can take a variety of forms.  Some may choose to purchase a writing journal and quite literally write in the journal much like a diary.  I have done this in the past going so far as to print out and cut and paste charts into the book with notations and include motivational quotes and thoughts on market psychology.  In the podcast interview with Nate he shared that he keeps an electronic journal and saves screen shots of charts when he chooses to take an entry.  This is also a very powerful way that a journal can be created.


Most research will suggest that you use the journal to keep track of your failures and all of your mistakes and categorize them into classes.  You can then take the class of mistakes with the greatest number and work to eradicate that from your life.  Do not rest until that specific error is dead.  Then start on the next most frequently committed error.  Ten months later, you may find that not only are you trading profitably, you are trading well.  A successful trader is more defined by the way he loses than by the way he wins.  The trader who wins right, but loses wrong will eventually be a statistic.  The trader who wins wrong but loses right will be around long enough to eventually get it right.  The trader who wins right and loses right will have to find creative ways to spend and give away the money earned.


A word of caution about keeping a trading journal.  Do not use your trading journal to merely point out your mistakes or to beat yourself down.  We also need to focus on our success. We need to celebrate our success.  If you keep track of your success and what works then you begin to train yourself about what success looks like.  No one likes a coach who yells at them all of the time and what we do not want to see happen is your trading journal turn into a book of failures.  Here are some suggestions of what SHOULD be included in your trading journal.


  1. Use the journal to learn more about the market. Print out intraday charts or make market observations, or point out patterns that you want to watch for in the future. Watch how the market behaves seasonally and look for market cycles. After months of doing this you may find that you have sensitized yourself to market movement and you may see patterns emerging in real time.  Your trading journal should be a learning tool and a way to “train your eyes.”  When I create a watch list of stocks and then take you through the process of why I selected those particular stocks, in this way it is cathartic for me as I am taking you through and letting you see into my own personal trading journal.


  1. Make sure to highlight your best trades and not merely focus on your mistakes. You’ll see that when we do write about our mistakes in the book it may help us to find a common denominator. The same is true with our successes.  We want to record our successful trades as well in detail so that we can see what success looks like and find the common denominators that led to that successful trade so that we can do it again..  We want to create a dynamic model of success not a book of self-criticism.


  1. Use the journal to prepare yourself for the next trading day and use it as an action plan or business plan.. Don’t just write about what has happened in the past.  Include your trading plan for the following day.  If you have any kind of watch list, chart, statistical analysis that you are using for the next trading day, these should be included in your journal.  If there are certain setups that are working right now or sectors that are leading the market, these should be included in your journal.  Your journal should be your business plan for the following day.


  1. Make sure the journal outlines specific steps for improvement. Don’t record statements such as “I need to do this better or that better” or “Gee whiz I need to stop doing that.”  Writing in your journal like this does you no good unless you immediately follow it with a step by step action plan on how you ARE actually going to change your behavior.  It is one of the reasons why I have always tried to provide you with an inspirational or meaningful quote.   Print them out and keep them near your monitor or record them into your journal.  It is my hope that after you have attended and earned a degree at WealthCampus that you will have improved not only your trading but as a person.  Use the journal for personal growth.  Include the motivational quotes that I provide to you if they impact you in some way.  Create an action plan.  We want to trade to trade well.


  1. Make sure the journal includes data and performance analysis.. I am crunching numbers all of the time and trying to find correlations.  I’ll find that sometimes I use portions of the journal to create and develop new scan ideas.  I have used the journal for back testing those ideas over time to make sure that what I am dealing with is statistically significant.  I use to spend a lot of time detailing each trade and keep track of wins or losses but I find that it takes you away from the process too much and it psychologically buries itself into your mind, this idea of winning and losing.  So much so that it may stop you from pulling the trigger when you need to because you want to avoid a loss to keep your winning % high.  It is the process we need to focus on and your account value will let you know whether you are succeeding in this regard or not.


So you see the journal is much more than the recording of your mistakes.  It is all encompassing.  It also contains your successes, all of your chart and trade ideas, quotes from individuals who inspire you in some way to be better, market analysis, an action plan or business plan for each and every trading day, data on not only your performance but on trading systems.  Whether you decide to keep this journal online or whether you decide to write and keep your journal in a notebook or folder that is up to you.


I feel it is my responsibility to coach and guide us towards greatness and self-improvement as we move forward.  One of the things that I will demand from you as a mentor and coach is that you keep a trading journal like described above.  If you have been keeping one already; perhaps you realize now that you need to change or modify the way you have been creating your journal entries.  If you have not begun to keep a trading journal then there is no time like the present.  Consider it your first homework assignment.