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TE02 - 5 Reasons To Keep A Forex Trading Journal

"A trading journal is one of the most important aspects of trading. As a trader, your trading journal will help you to get focused and also helps you treat your trading system as a business. Many traders often start out with a trading journal but soon lose focus. This is because it obviously takes a lot of time to keep and also to maintain a log. But this is so in order that you treat your trading seriously. The importance of maintaining a trading journal cannot be stressed further. In this article we take a look at the top five reasons why you should maintain a trading journal. We will also show you the importance of maintaining a trading system and why many successful traders make use of a trading journal in order to remain consistent in their trading. Read about the top five reasons why you should maintain a trading journal and its importance for you as a trader."

As a trader, you might have come across, many times about the importance of using a trading journal. A trading journal is perhaps one of your best investment you can make as a trader. It is important to cultivate this habit of maintaining a trading journal as it can become your guide towards your journey of being a successful trader.

But you might be wondering how to start with a trading journal and what important aspects of the trading journal that you should log.

What is a trading journal?

A trading journal is something that is important for every trader. Even the professional traders make use of a trading journal. It helps them to keep a log of their trading activity and also helps them to fine tune the shortcomings in their trading.

Therefore, it is essential that you start using a trading journal right from the word go. Many traders do not keep a trading journal. They often think that having a trading journal takes time and doesn’t add much value.

The truth is that a trading journal can help you do a lot. A trading journal helps you to keep track of your bias before taking a position. It also helps you after that in the aspect of analyzing your trades.

This method will help you to stay focused. It also helps to remove the risks of allowing your trading emotions into the picture.

So, by now you might be wondering how to get started with using a trading journal. Here are five reasons to begin with on why you should use a trading journal.

1. Keep track of your trades

The first and basic important function of using a trading journal is to keep track of your trades. This allows you to understand whether you are over trading. Because it takes time to fill in the details into your trading journal, it helps to keep you in focus.

A trading journal not only allows you to keep track of your trades but it also shows you when you are focusing on the correct instruments or not.

2. Understand the drawbacks and fine tune your trading strategy

A trading journal helps you to analyze your trades. This way you can get a better idea of your trading strategy. Some traders also make use of fundamental analysis in their trading. If you are such a trader, then it is important that you also log in these details.

Once your trades have been filled and you do not have any open positions for the remainder of the day, you can then look to your trading journal to understand how well your trades fared.

This will help you to see your trading strategy, especially if you faced any losses or if you took profits as well.

3. Build a close relationship to technical and fundamental analysis

It is essential that you also make use of fundamental analysis in your trading. As such, a trading journal can help you to build the complete picture for your trading. This allows you to combine the information you learned from fundamental analysis and the technical analysis aspects as well.

A trading journal will help you to see the complete picture. Because sometimes it can be difficult to pinpoint the basis for your losses, by combining both technical and fundamental analysis, you are able to truly get the big picture in your trading.

4. Set your goals and follow them

A trading journal allows you to set your goals and also helps you to follow them. Typically, traders set a limit on the total losses and the gains that they can take in a trade. While this can be difficult to follow all by itself, a trading journal can help you to follow your goals.

Once your limit set in terms of profits or losses are reached, you can stop trading for the remaining period. Instead, you can simply analyze your trades taken and this will help you to understand what went right and what went wrong.

5. Become a disciplined trader

A trading journal helps you to become a disciplined trader. This allows you to trade with logic rather than with emotions. Because it is highly likely that you will log the details of your trades beforehand, you are able to follow the rules that you set.

Even in the case that your trade ends up a losing trade, you would be able to not let your emotions get the best of you.

In conclusion, the five reasons for keeping a trading journal is only one of the many reasons. We cannot stress the importance of maintaining a trading journal which is importance in your journey to become a successful trader.

Read 822 times Last modified on Friday, 26 July 2019 16:17

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