According to my understanding one of the key areas that many traders fail upon is creating or keeping a trading journal. For some reason people blow this off but it's an aspect of trading that truly defines and separates the disciplined and organized traders from the rest who continually lose money and blow out their trading accounts. I just realized that there is a recurring theme with all my posts discipline, is Forex Training Worldwide trying to make a point here? I guess by me starting this blog I'm already on the right path.
The purpose behind a trading log or journal is for me to log every trade I entered and exited and over time, I will build my own track record and an equity curve which will be very important tools in gauging my performance. Logging all those trades I will have metric data which will indicate certain patterns like
- What am I doing wrong
- What am I doing right
- If am over or under trading
- What time of the day works best for me and my strategy
- What strategy works best for my personality
- See if I'm being too aggressive, risking too much
- See if I'm being too passive, risking too little
Forex trading success is defined by the end result of a series of trades over time and not the end result of ONE trade, having a trading journal can help me from falling into this trap. I believe from what I have read and learned that a trading journal will help me create a Forex trading plan, and over time by regularly maintaining my trading journal and by me viewing my equity curve these factors dictate what my next move in the market will be.
When logging all my trades in a trading journal I must avoid the trap that most trades seem to fall into, concentrating on pips or percentages, how many pips I'm up, how many pips I'm down. Instead I should track my performance in terms of pounds risked vs. pounds gained (risk reward), which can ultimately be reflected in the number “R”, instead of percentages or pips.
I must keep in mind that I'm learning here how to make money, and making wise investment decisions, not pip collecting.
When logging all my trades in a trading journal I must avoid the trap that most trades seem to fall into, concentrating on pips or percentages, how many pips I'm up, how many pips I'm down. Instead I should track my performance in terms of pounds risked vs. pounds gained (risk reward), which can ultimately be reflected in the number “R”, instead of percentages or pips.
I must keep in mind that I'm learning here how to make money, and making wise investment decisions, not pip collecting.
That's a very brilliant idea, A2J. Writing all your actions in one log book can provide you with the right information on how to adjust your approach whenever you're in a trade. This can help you monitor if you're making a mistake with your actions, actually.That's a very brilliant idea, A2J. Writing all your actions in one log book can provide you with the right information on how to adjust your approach whenever you're trading. This can help you monitor your behavior if you're making a mistake with your actions. For example, in cases such as when you're not able to analyze the currency changes well, and if that happens, you wouldn't have a good trade.
ReplyDeleteHi Neil
ReplyDeleteI'm glad you find this useful and you will see a world of difference in your trading if you apply this simple rule, like the saying goes "how can you fix it if you don't know whats broken". Using a trading journal can help you fine tune why a trade was successful or not enabling to break bad habits.
Wish all the success with your trading and happy pipping!
Tony