Why You Should Be Keeping a Trading Journal

There are many different reasons that people get attracted to Forex trading and depending on their objectives there are many different ways to trade. One thing all traders have in common, whether they be day traders or longer-term traders is the need to keep clear and concise trading records. A trading journal can be the difference between turning a profit and making losses. A trading journal will be a key factor shared by most successful traders. Here are a few reasons why trading journals are very useful when you are looking to improve your trading:

Spotting Patterns and Trends

When you have a trading journal to note all of the different trades that you are making, it allows you to build up a base of data that you can then analyze. You can take a look back and see what types of trades have been successful for you and what types of trades have consistently been losers.

This can give you an insight into what types of trades you should focus on and what you should avoid. Some people will record their trades with a pen and paper, while others will use web-based platforms that allow you to quickly and easily keep track of trades.

Testing Out New Strategies

Traders are always looking at ways in which they can get an edge. Whether this is trying out a new strategy or using new tools, there are many things that you can try to boost your bottom line.

It is a good idea to test out the new approach by using a demo account first. This allows you to spot any potential weaknesses or areas of improvement before you properly implement it. Only once you have a tried and tested strategy developed should you then bring it into real money trading. Most leading forex brokers, such as Forex4you, will have demo accounts that you can use in the same way as if you were placing real money trades.

Take Control of Emotions

By keeping a trading journal, you will have a factual record of your results. This allows you to take an objective look over everything, rather than letting emotions dictate your decisions.

You might be able to spot triggers that led you to make poor trades. Alternatively, you can see what sorts of environments tend to deliver good results. This feedback can be invaluable, as it helps you to evaluate which trades are worthwhile making and when you have an edge.

Staying the Course

Discipline is one of the most important traits for a forex trader. If you do not have the discipline to stick to your plan, then you’ll likely not be able to achieve consistent results over time. Keeping a trading journal means that you are going to be accountable for all of the trading decisions that you make.

It allows you to avoid making similar mistakes in the future, refining your plan as needed. Regular reviews are needed to identify any potential areas of concern. You will also be more motivated to stay the course when there is a hard record of all your results.

Assessing Strengths and Weaknesses

Cold, hard numbers are not going to lie. A trading journal is an objective measurement of your trading activity. It means that everything will be starkly laid out in front of you.

A trading journal will hold up a mirror to all of your strengths and weaknesses. This will ultimately improve you as a trader, as you’ll get an insight into what you need to do to get better. Shoring up any weaknesses can be just as effective as improving your trading skills.

Conclusion

There are many undeniable benefits associated with keeping a trading journal. Not keeping a journal is a great disservice to yourself. It doesn’t have to be a mammoth task either. You can keep a simple journal to start with and you might surprise yourself at just how much value you can get out of the process.

Forex Trading involves significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.