Just a repost from the newbie section, but I thought since this is my trading thread, and it refers to how I trade, it would make for a good addition to anyone reading the thread.
I thought i'd take some time of my day to try and hammer home a point which has recently become a bit of an "awakening" for myself. And I think its advice any newbie could benefit from. THE TRADING JOURNAL! *DUN DUN DUN DUHHHHHHHH*
Scoff. Laugh. Mock. But seriously, its a key component of any traders arsenal if they intend to improve their trading management, entries, and finesse.
I used to keep a detailed journal, and then somehow, I stopped along the way sometime last year. I didn't think much of it... it was just a stupid excel spreadsheet right? It couldn't actually have an effect on my trades... i mean I knew what I was doing, and no spreadsheet would've helped one bit. Well, thats not entirely true.
The truth of the matter is i've found it to be an integral part of my recent success. The journal has little effect on my entries, but plays a large role in my trade management and profit taking, which in my opinion are the crucial element of trading that separates the winners from the losers.
How many times have you been in a winning trade and you knew in the back of your mind you were supposed to wait for something to happen before you got out of the trade. An indicator was supposed to cross, a resistance level was supposed to be hit, a candlestick pattern was supposed to form... but you bailed. You thought to yourself, "Self: I have profit here... I want to take profit and feel safe because I will have WON!". Don't lie, we've all been there. My guess is a lot of you are still there.
Whats worse is your systems that everyone in here trades has been backtested by yourself. And in that backtesting, you adhered to a set of rules, you won't exit until X happens. But now that its live, and its real, and its happening, you find yourself lacking the courage to commit to your decision. This is where the journal comes in.
Each trade I take, I list the time, date, pair, timeframe, and in then i list in a comments section the reasoning behind the trade - did I have everything going in my favor. Immediately, if that isn't the case I have to write it down, which means I have to process the thought that I have done something I know I shouldn't have. I gambled. The journal made me realize this thought that might go otherwise unnoticed. More importantly, i follow up each trade with continued comments on my management.
My trading style requires me to manipulate stops and take profits at certain profits levels. However, it can be sooooo tempting to jump out half of your contract 5 pips before that target is hit... We don't want to miss it do we? But if I did that, I have to write about it in my journal, and I have to admit to myself that I have broken my rules - the rules that I built to protect myself, and make money.
A trading journal forces yourself to be held accountable for your actions. Its one thing to put on a position, do everything right, and have the market move against you. But your conscious is clear. You did everything you could've, and it just didn't work. I can live with that. Its a much worse feeling to put something on you shouldn't have in the first place, or worse, start getting jiggy with your profits due to a "feeling" instead of sticking to what you KNOW.
By journaling your entries you keep a dialog of introspective honesty that holds yourself accountable. And in a business where you make or break yourself, I can't think of much else that is more important than that.
Long story - short... Journaling provides a structure to force yourself into adherence with the rules you already claim to be following. And at the end of the day, week, month, and year, it will add to your P/L, I guarantee it.
Novel Mode Off....
Cheers!
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