A trading journal helps you maintain a record of your trading activities over a time period. Reviewing this record is useful in knowing the mistakes and making efforts to correct them. Maintaining a journal is an important step towards profitable trading.
Stock trading is a serious business. It has the potential to earn you handsome gains. Successful and profitable trading requires well planned stock trading strategies, mathematical calculations, learning about the mistakes you make and correcting them.
Making a trading journal is an important part of your trading. You record all the important aspects of each trade in this journal. Looking and reviewing it regularly helps you find the errors you make in trading and what you can do to make your trading more rewarding and profitable.
If you do not learn about your past mistakes, it is quite likely that you will keep repeating them. This is not a good thing for your trading and your money.
Most of the traders do not maintain a the journal and majority of them even do not know what is trading journal. Consequently, they are unable to correct themselves and keep loosing in the stock markets.
We will learn in this article about how do you make a trading journal and what should a trading journal include!
What Is Trading Journal
A trading journal is nothing but a trading dairy used to record the trading information for each trade you execute. The information is about the date of entry and exit of trade, the capital invested, outcome of the trade and the specific notes about a trade.
You can write this information simply on a plain paper or get a computer generated spreadsheet based journal. You should write all the important data about each trade before or after a trade. This makes your trading plan.
Having a written trading plan removes human emotions from trading. You know exactly when you enter and exit a trade, your profit target, your risk level and the reason why you entered the trade.
Online trading journal are available to download on internet which may include some fee. I have created a simple journal which I use for my trading activities (see image below). It is quite useful to track my performance.
You can download this free trading journal in excel sheet form at below link. You can also make changes to it according to your requirements.
This spreadsheet consist of multiple columns to enter the various parts of a trade. I talk about them further down when we discuss what should a trading journal include.
Having this data helps you track your performance in stock trading over the time period. You get to know about the good and bad things about every trade. You find what mistakes you made. You learn what works for you best and what not.
What Should A Trading Journal Include
A good journal should include following components of a trade :-
- Stock symbol of the stock you are trading in
- Date of trade initiation
- Total capital put in the trade or the number of shares you bought or short sell
- Date of trade exit
- Total capital you got back
- Profit or loss incurred
- Brokerage charged for the trade
- Net gain (6-7)
- Trading instrument used like delivery trading, futures trading or options trading
- Direction of trade – long or short
- Signal which lead you to enter the trade
- Remarks about this trade (feedback)
These components are enough to track your performance in stock trading.
Conclusion
A trading journal is a must for a serious trader. Maintaining the journal and looking back time to time to get the feedback from your past trading decisions might sharpen your trading skills. You can easily find out your strengths and mistakes in trading.
Maintaining a trading journal becomes a tedious task which involves lots of data entry. However, you must stick to it and always maintain a journal or trading dairy to take your trading to higher level.
