Creating a trading journal can, most of the time become a boring affair.
It is akin to the paperwork that many of us don’t like. After all, trading is all about getting in on the action. Spending time to collect your thoughts and documenting it, and worse, taking screenshots of your trades can be cumbersome, to say the least.
There are many articles out there talking about how to create a forex trading journal. While many are information, such articles are good only to read once. If you want to put it into action and maintain this as a habit, many fall a long way.
True, creating a forex trading journal is indeed one of the most boring aspects of forex trading.
Yet, it is one of those habits that a day trader should follow to the dot, but don’t! After all, if you want to improve yourself as a trader, and improve your trading strategy, there is no better way than creating a forex trading journal.
But the biggest drawback is the amount of time and effort it takes. Even a short duration trade, that spans for just under an hour can take at least fifteen minutes at best to document.
And your task doesn’t end there. You will have to update your forex trading journal entry when the trade is closed.
Going about this, the manual way can be tiresome, to say the least.
Hence, while a forex trading journal is good, the practicality of maintaining it diligently is a different story.
Have you struggled as a trader to maintain a forex trading journal? If yes, then this article will help you with some tips and tricks on easy and fun ways to maintain a forex trading journal.
One of the best ways to overcome the monotony of maintaining a trading journal is to look at its benefits.
What do you, as a day trader gain from maintaining a forex trading journal? The answer to this will depend on your objectives. And these objectives can be personal and may change from one person to another.
But overall, the goal of a forex trading journal is to help you understand how good your trading system is. A forex trading journal’s goal should also be to help you understand your trading habits.
- Are you overtrading?
- Do you sometimes take on trades that defy your trading logic?
- Are you making any profits from forex or are you giving back the profits made, to the markets?
The most important of these is, of course, improving your trading system.
A forex trading journal can help you pinpoint the inherent weakness in your trading system.
If you have the patience and are committed enough, you can also get information about your trading psychology too.
- How do you trade when faced with a losing trade?
- Are you a disciplined forex trader?
- Do you (subconsciously) tend to trade specific currency pairs?
- What times of the day do you trade the most?
The list can be endless.
The point of having a trading goal is to help you evolve as a trader, both on the psychological front as well as from a trade execution level and risk management.
Of course, there needs to be a balance between the efforts you put into a forex trading journal, and the benefits you can get out of it.
A well-prepared trader, who knows exactly what they want from their trading journal has already won half the battle.
If you blindly follow the rules set forth in creating a trading journal, it will get monotonous along the way. Sooner than later, you will end up abandoning your forex trading journal entirely.
So how can you make this into a more interesting experience?
The first step is to make a list of points you want to gain from your trading journal. These could be various things. To get you started, here are some ideas.
- How good is my forex trading strategy?
- How does my forex trading strategy perform under different conditions?
- How much am I risking per trade?
- What is the average holding duration of my forex trades?
- How many trades am I executing a day, week and in a month?
- How much am I paying to my forex broker on a monthly basis (spreads or commissions or both)?
- What are my most traded forex instruments?
- How does my winning trade look like (or what are the factors that led to a profitable trade)?
- How does my losing trade look like and what are the reasons behind the loss?
- Do I trade at market or use pending orders?
- How often does my trade hit the take profit (and stop loss levels)?
Well, you get the idea. The above points should help you start thinking in the right direction.
If you follow a forex trading journal template, then chances are that you would end up using it for a while. Sooner than later, you end up discarding it.
It is similar to a trading strategy.
There are many reasons behind this, but it often comes down to one common aspect.
You can initially find a trading system that someone shared on a forum, to be very interesting. But sooner than later, you end up looking for another forex trading system.
This holds true with a forex trading journal as well.
Unless you customize and create a personal forex trading journal, you won’t have the will to follow through with it, day in and day out.
To avoid this, traders look for the easy way out. Which is to simply find an online trading journal that they can plug into.
You can just input your investment password with read only rights and have the trades logged automatically for you.
This can help, but it doesn’t convey much market information.
Thus, even when you lookback to this quick way of creating a forex trading journal online, you will end up not following up diligently.
The reason behind this is because the automated trading journal doesn’t convey much information that you are interested in. Sure, you may fancy some statistics such as your trading strategy’s win rate, or its profit factor.
You may even see automated charts that will show you your entry and exit levels.
But beyond that, there isn’t much information that is useful to you personally as a trader.
So what does a day trader go to do? Do you sit and force yourself into documenting every trade you take?
And if you answered yes, the question is how long can you keep up at it?
Now that we understand the complexities involved in maintaining a trading journal, the obvious step is to figure out the pain points.
- It can be tedious to take a snapshot of your MT4 trading screens before and after the trade
- It can be tedious to log your thoughts about why you are entering the trade
- If you entered a trade at market, then do you spend time monitoring your trade or do you spend time writing about it?
- How can you revisit the forex trading journal and get the relevant information that can help you improve as a trader?
- And most importantly, how can you avoid repeating the same mistake?
The trick is to combine automation with a bit of personal effort.
Let’s take a look at how you can overcome the above obstacles and more in maintaining a forex trading journal.
The trick to creating a forex trading journal and maintaining it is consistency.
And the only way to make this into a habit is to go about it diligently. This means you need to make it fun to maintain a forex trading journal. Yet, at the same time make it as informative as you can.
Here are some ways to do just that.
If you are someone who has time on their hands, then by far, the easiest thing to do is to blog about it.
This gives you the benefit to detail your trades. On the upside, if your site begins to generate some traffic, you can also monetize it. Doing this, will help you to not only log your trades but also gives you the chance to make some money from your blog.
Of course, if monetization isn’t your thing, you can set your blog to be private. There are many blogging platforms like WordPress or Blogger where you can easily start a blog and maintain your forex trading journal.
Websites such as Myfxbook.com and even MQL5.com are great places to connect your MT4 account.
These websites in turn aggregate your trading data and compile it into easy-to-read statistics.
But you can go a step further. Using free charting platforms like Tradingview.com, you can publish your trades (either publicly or privately). This way, you get the best of both worlds.
While the former websites can help you on the statistical front, the latter will help you to analyze the winning and losing trades.
And what’s more!! You can also annotate and comment on the charts directly including placing your entry, take profit and stop loss levels easily. You can quickly look back on these trades (and even update them) as the trade plays out.
A good tip is to simply tag the trading ideas that you publish with your MT4 generated trade number. You can then link u the trading idea URL to your myfxbook or mql5 website. This will be a great way to just click on the link and figure out what went right and what went wrong.
Even the trusty old MT4 trading terminal has some tricks up its sleeves.
If you were day trading, you would know how easy it is to annotate your charts. After you log all the details, you can take a snapshot of this and save to your local folder.
The only downside with this method is to take another snapshot when the trade is closed. This is something that could be a bit demanding especially if you trade quite a bit.
Another simple way to maintain a forex trading journal is to maintain an excel log.
You could do this by inputting the trade details and other information. With excel, you can also create automated formulas that can tell you the number of lots you can trade. Thus, risk management can also be built-in into the excel trading templates.
The downside with this is that you must diligently input the details. There is no automated way to do this unless you are proficient at coding.
But once you get the hang of it, it becomes second nature.
The above ideas should help you get started in whatever way you want to log your trades.
But now comes the question of the details. What kind of information should you log into your forex trading journal?
Assuming that you are connecting to one of the automatic solutions presented earlier, here is the other important information that you should keep track of.
- Reasons behind entering a trade: Taking cues from Twitter, try to limit this to about 150 – 300 characters. This will be the headline for your trade and should convey easily why you are going long or short
- Underlying factors for your bias: The next part is to jot down some of the details. These may seem a bit cumbersome, but when you look back on the past trades, this information can be very valuable. Make a five-point list that covers fundamentals and technical reasons for initiating the trade
- Price levels: It goes without saying, but whether you are trading at market or placing pending orders, make sure to log the direction of the trade, the entry, TP and SL levels. This will help you see how your trade fared. You can also see more information such as how the trade moved after your TP or SL was hit.
- Chart snapshot (before and after): Take a snapshot of your trade, before and after. This can show you how the market has moved during your trade. Alternately, use Tradingview and publish the trade idea so you can revisit it anytime in the future
This is where most of the traders fall off the wagon.
So, you put in the efforts to maintain a trading journal, what next?
Well, the key is to analyze your trades frequently. You can dedicate an hour or so to see how your trade has fared. If it closed with a profit, analyze in detail about the conditions that led to the profit.
If your trade closed with a loss, then look closer as to what went wrong. Is it a failure on your trading strategy or did the market decide to reverse course?
You tend to learn a lot more from losing trades than winning trades. But when you combine the information from both winning and losing trades, you start to gain valuable insights!
This will help you to stick to your trading strategy and improvise it. You can get ideas on the market conditions, thus telling you when you should stay out of the markets.
Being privy to such information is much better than moving from one trading strategy to another.
To conclude, a forex trading journal is key to your trading success. It is like a performance review that one is subject to at work. Assessing your trading success or failure is a great way to evolve and grow as a forex trader.
So if you are still sitting on the fence about creating a forex trading journal, now is the best time to start!