Today is my first day of writing about my trading journey. Hope all goes well!"
Hold on a bit! I'm guessing that made you laugh a little. But the question is why the hell do you laugh at that? Give it a thought, will you?
Nevertheless, a trading journal or diary is a log of all trading activities, and keeping one is quite difficult and may be time-consuming.
However, it will help you to monitor both the performance of your trading system and your ability to execute it with consistency.
Learning how to write one will not only benefit you but will also discipline you, whilst learning about yourself and the overall trading psychology.
Here are some of the advantages of keeping a trading journal:
1. Discover, Evaluate, Analyze, And Flash Out Weaknesses
Just due to the fact some procedures worked for you inside the past, that does not suggest you have to simplest apply the ones! In some unspecified time in the future (we hope not even though) all techniques unavoidably fail and must get replaced.
As a result, it's far essential which you nevertheless try to locate new ones. Through recording all of the specifics of your trades, you may be able to do an in-intensity analysis of the trades you've got completed to date.
2. Helps You Wire Your Dreams
Set objectives that might be slightly better than your preceding ones to keep away from putting too much strain on yourself whilst you are nonetheless studying.
A journal is an ideal manner to determine what goals you want to accomplish, how you'll display your fulfillment, and what you may do to obtain your subsequent goals.
3. It Can Be Used As An Accessible Portfolio
To be completely frank about it, a trading journal assists you in "constructing" a digital portfolio. Normally this is implemented by beginner investors wherein they installation a hypothetical quantity of budget to peer if they could outperform the market.
This will additionally be beneficial and used as an exercise device for traders who want to amplify into a new market and prefer to experiment before stepping into the actual trading international.
4. Holds You Responsible And Practical
While you maintain a trading diary, you are less probably to make trades that aren't part of your buying and selling method. Impulsive buying and selling are what typically reasons most traders to lose money. So, take that consideration into account, will you?
5. Help You With Risk Management Process:
A trading journal will help you identify regions in which you might be making mistakes in threat control.
It is viable that you're not taking enough hazard to make vast praise through putting the prevent loss too near the current price, or that your position is just too small to guide in any kind of real benefit.
6. You'll Have The UPPER Hand With Trading Psychology
Needless to say, emotions have a critical function in buying and selling, won't you agree?
A buying and selling magazine will help you see whether you ever get disenchanted after a loss and start making trades or in case you were happy after a good trade!
It'll also assist you to see if you make rash selections after a string of appropriate trades (and vice versa).
When you are aware of them, you'll be capable of revealing them and maybe much less probably to make rash selections so one can have a poor effect on your trades.