A trading journal is a must have to become a successful Forex trader. This is your aide in tracking your progress as you continually hone your craft. When you continuously record and review your trades, your learning process is expedited since a trading journal is like a self-coaching tool. You will be able to spot weaknesses and strengths in your trade and seek further ways to improve on it.
Basic Details that You Should Have in Your Journal
A trading journal without the necessary details is not helpful. Similar to a guard logbook, only recording the name that have entered the premises, and not recording other essential information (i.e., person to be visited, date, time, purpose), is useless.
In your journal you should have the following detail at a minimum:
- Currency Pair
- Time Frame
- Strategy Used
- Long or Short Trade
- Percentage of Risk to Your Capital
- Entry Price
- Stop Loss
- Take Profit
- Closing Price
- Reason for Entering the Trade
- Analysis of Your Trade
It is also recommended to keep a screen shot of you the currency pair’s chart. To do this, using your MT4 platform, go to File > Save as Picture > Active Chart (un-tick “Post image online in MQL5 Charts Service and get the link).
Benefits of Having a Journal
As mentioned, a journal is a recordkeeping of your progress with Forex trading. It is one of the best feedback tools you can have. Your trading journal is useful in checking on what you did wrong, what you should avoid and what you can improve on in your next trade. This is especially true if you are having a bad trading week.
Also, by consistently keeping a trading journal, it will help you break your bad habits in trading since your trades will not be based on luck, but based on your continuously improved trading plan. As such, you become more confident in each trade.
Handwritten or Computerized Journal
With our current technology, everything is much easier using computer. However, study show that handwritten notes are better as our mind is able to retain and understand more with handwritten notes.
Whether you choose handwritten or computerized journal, the key is to consistently record and review your trade. A recommended time to review is to do it weekly or monthly, depending which one you are comfortable with.