How You Can Optimize Your Trading Performance By Tracking Your Trades
It would be extremely difficult to find a successful trader who hasn’t kept a trading journal. Even if it’s just a few notes about their daily ups and downs.
One of the main reasons that businesses are successful in the first place is the fact that they keep detailed records. Detailed records enable them to be able to analyze and optimize their operations. Without this, how are they going to learn from their mistakes and make improvements?
Trading is the same as this. You need to think about your trading as a business and keep a detailed trading journal. This way you can cut your learning curve and use your data to see where you went wrong or what affected your trades.
When you come across a struggling trader, you can almost guarantee that they aren’t keeping a journal and don’t understand the importance of having one.
Looking at things like your emotions and position pre, during, and after trades will help to grow your skills, help you to identify weaknesses and strengths, help you to make wiser choices, and hopefully make you a more successful trader.
Using report generation you will be able to pinpoint the areas that need improvement rather than just guessing what might have gone wrong. If you want to make successful trades this is how you are going to do it.
Image by Gerd Altmann from Pixabay
A trading journal is a way to go forward, especially if you are a struggling trader with no journal in place currently.
Below we’ll take a look at the steps you need to take to start your trading journal and see what you are capable of.
What Should You Track?
When you are tracking you can become an expert. You will find that the majority of traders keeping a journal will stick to basic metrics such as entry, exits, net profit & loss, as well as position size.
This is certainly a good place to begin, however, if you want to be a great trader, you are going to want to look a little further than just your profit and loss.
You also need to consider other factors market sentiment & analysis, emotions, and more.
Some of the metrics you may want to include in your journal include:
- Position size used
- Entry price
- Exit price
- Asset Traded
- Session and/or Trade Grading
- Time and date of the trade
- Was it a short of long trade ‘
- Final P/L result
- Notes on why you took or didn’t take a trade
Image by Gerd Altmann from Pixabay
How To Look At Your Journal And Improve Your Trading
If you are consistent with keeping your journal and you are disciplined enough to track all of your trading then you should be left with a decent amount of data to review. With a decent amount of data, you can analyze and optimize your trading results.
A few things to look at include:
- Identifying patterns that are resulting in bad trades and finding ways you can prevent them from happening.
- Look for patterns that are leading you to successful trades and look for ways you can maximize this.
If you are a new trader you need to realize that losing trades are all part of the package with this business, however, no loss is the same. If you make a loss, you need to be able to look back at the setup and see that it was done properly to start with.
When looking to maximize your successful trades you need to identify your problem areas. For example, it might be that you always make bad trading choices on a Friday or in a certain niche. Or it may be that you are getting a good trade but you always seem to exit too early or enter too early.
Good trades and bad trades are just as good when it comes to your journal. Particularly when you can look at a good chunk of trades such as 6 months or 12 months. Having a mixture of trades gives you a good amount of data to review and thus better chances of optimizing your trading plan moving forward.
Where Can You Keep Your Trading Journal?
Here are a few options that you can use to keep your trading journal for free.
Google Docs
This is a simple and easy tool that you can access both online and offline. All you need is a Gmail email address. It’s simple to use and a great place to make notes and keep track.
Evernote
You can use either a free or a paid version of this, and it is one of the favored ways to keep a trading journal. It enables you to take screenshots straight into notes, create notebooks, add tags, and annotate images, therefor it is really easy to make a detailed journal.
If you want to learn how to use Evernote this video will help:
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Windows Snipping Tool/Mac Screenshot
If you are unable to copy your charts from the platform that you are using, you will find it useful to use one of these tools. You will be able to take screenshots of your charts to add to your trading journal.
Final Thoughts
You should now understand how important it is to keep a trading journal and are probably dying to get started. It’s going to be a huge benefit to you going forward. It is one of the key things to include in your trading plan and should move you from a consistently losing trader to a consistently profitable trader.
When keep a journal of your trading activities, you can review your results. This will in turn lead to you having better performance and maximizing your profits.
Have you ever kept a trading journal? Did you find it useful? Please share your thoughts in the comments below.
