5 Crucial Elements for Your Trading Journal
Author: lerhing Total views: 6 Word Count: 447
A trading journal is a living document that will help you show your successes and failures and make you a better trader. Outside that viewpoint, a trading journal makes accounting that much easier, and tax-time is made a piece of cake.
A trading journal can be complex and contain many different entries, or it can be as simple as just five different elements. With that said, this article will outline what those five elements are and how they can work for you. This data is more important for day traders and some swing traders, but can work for just about anyone. Trading journals are one more element to obtaining financial freedom.
Profit and loss
This should be obvious, but a profit and loss column will help keep a ledger of how well you are performing over time and with different strategies. Some stock traders might find that the best time of the year for them is summer, but they would never know this without recording their trading data.
Recording profit and loss data will help you boost trading profits by eliminating the weaker parts of your strategy. Trading success comes from knowing your winners and your losers.
Percentage of winners
With a very uniform trading plan, knowing the percentage of wins will bring even more money. Consider this scenario; you’re 58% profitable, but by moving your stop just 5 ticks down, you’ve discovered that you’re now 63% profitable with no additional losses. This tells you that your strategy was too conservative and needed more breathing room to produce greater profits. You’ll be able to complete a customized plan just from the percentage of winners column alone.
Time of trade
For the 24 hour forex markets, this is even more important. Knowing when you place the most quality trades is important; perhaps trading the opening gaps is what is killing your account balance. This data will prove valuable when you start to analyze your weak spots.
Commissions and spreads
For short term day traders and swing traders, the price of commission certainly works itself into play. Paying $50 both ways to place a trade adds up in the long run and can certainly send a good strategy south. Day traders are prone to losing money with winning strategies because of the high commissions and large spreads they pay to enter a position.
Comments
If you take a lot of trades, you’ll never remember one specific trade. Creating a comments section is a good way to log how the market performed as you entered and before you closed out. This is the section for constructive criticism; after all, you will not offend yourself.
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About the Author
Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders , Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
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