Recording your trades

by Daryl
Updated: June 19, 2020

Recording your trades in a trading journal is a useful discipline for improving your trading system

Why is recording your trades important for your trading success? A trading journal will help you stick to your trading system and clearly show what worked and what didn’t.

Author’s note, 2020-06-17: With lockdowns in place in this current Covid 19 environment, many brokers are seeing an increase in trading accounts opening up and increased trading activity from their existing clients that are using their time and flexibility of working from home to look at the online financial markets for trading and investing opportunities.

As aspiring retail traders embark on this new journey of online trading, you will inevitably run into a steep learning curve takes you on a roller coaster ride of emotions.

Your eyes get glued to the screen scrutinizing every movement and scanning around websites for trading strategies and media reports for cues and opportunities.

The initial enthusiasm and hope that you can finally figure the market out turns into confusion and feeling lost as you start seeing your trades going against you and everything that you thought should be going to plan is not working.

More questions come to your head: Should I find a new strategy? Should I average to my losses? Sad to say that this is the path and reality that most retail traders often face.

Metrics to monitor

You are never going to figure out the market so why even try in the first place? Take a step back and start focusing on yourself what can give me confidence in my trades.

Start putting in place a trading plan and stay disciplined to implementing it. Focus on the metrics to track and start recording your trades with a trading journal.

Here are some of the metrics to include in your trading journal:

  1. Risk/Reward of each trade - Plan out and then record down the risk reward ratio of your trades to evaluate trade expectancy of your strategy. What is the average risk to reward ration that this strategy gives?
  2. Win Rate - How many wins does your strategy give you? Is the winning rate in line with your risk to reward ratio? Do you adjust your risk reward ration to increase your win rate?
  3. Average Loss and Wins per trade - Add up your total losses and wins against total trades taken in a specified period of time (e.g. week or month) knowing this metric will allow you to execute your plan with calm and confidence.
  4. Psychological mindset when placing the trades - This is the qualitative metric component to assess own trading psychology. What am I thinking when I took this trade? How often do I look at the trade after I had put them on.

Testing and improving your trading system

You should give your trading system a run of trades over a specified time to evaluate the trade expectancy and results that your trading plan shows.

Don’t do a overhaul of your entire trade plan, but rather add or remove components one at a time so that you can track you results effectively and know how each adjustments affects the metrics you are tracking.

Having a trading plan and tracking the performance of your plan is a good habit and absolutely crucial for all traders. It provides us traders with direction and easier decision making process in a markets that does not make sense all the time.

More info

“Trading Journal, Key Element To Your Trading Success” at decisivetrades.com

“Building a Trading Plan” at mytradingskills.com

Internal links

Introduction to Forex Forex peer trading Cost averaging Go to Articles
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