One of the critical traits that profitable traders have in common is that they use a trading journal.
This post will show you how to use a trading journal effectively, how to get free trading journal templates, PDF’s and Excel spreadsheets so you can improve your trading performance.
What is a Trading Journal
Every tradesperson needs their toolbox, and a trader is no exception. A trading journal is one of the most effective tools to help traders manage their trading performance. It is the place where you record and review your daily trades for analysis and future reference.
A trading journal can help you track your progress as well as learn from your mistakes. If there is one thing every trader has in common, it is that inevitably, we all make mistakes. A trading journal allows us to record our mistakes and turn them into learning opportunities at a later date.
It is, therefore, vital that you become intimately familiar with this trading tool and learn to use them to your advantage.
Trading journals can be anything from sophisticated pieces of software that automatically analyze your trading data and make suggestions for improved performance to physical journals that you bought off Amazon for $9.99 and write in using an old pen you found on your bedside table.
How to Use a Trading Journal
The most frequent cause of poor trading performance is usually a trader’s inability to stick to their trading plan when trades go wrong. One of the main objectives of any trading journal is to ensure compliance with your trading plan.
However, a trading journal is only as valuable as the content that it contains. If you fail to accurately record your trades, using the trading journal to evaluate your performance becomes an exercise in futility.
It would be best if you were consistently recording your trades in your journal as quickly as possible, regardless of whether or not they were successful. As human beings, it is natural to be uncomfortable with the prospect of a written record of our failures and mistakes.
You must overcome this and be honest enough to record your mistakes (and successes) accurately. To help you do this, here are three tips on how to use your trading journal effectively.
- Begin recording in your journal before you open the trade and end your record once the trade has concluded.
- Detail your emotions when writing about your trades. This will help you come to understand your mind and trading psychology. As Epictetus once said, “no man is free who is not the master of himself”.
- It is common for trading journals to be skewed towards self-analysis. Make sure you include any observations you make about the market. Whether it’s how a particular currency pair reacts to an NFP release or which way a stock moved after a strong earnings announcement, if you noticed it, record it. You will be surprised how quickly you see patterns begin to emerge.
Trading Journal Excel Template
While it is common for many traders to employ more sophisticated trading journaling software, this is not always necessary. Some traders prefer to design their journals and manually input the data themselves.
For those of you who wish to take this approach, It is entirely possible to keep a manual trading journal using Microsoft Excel. You can find an example of an excel trading journal in the image below.
EdgeWonk Trading Journal
The EdgeWonk trading journal is a software product that provides users with a comparatively comprehensive analysis of their trades. Its bespoke design offers you the opportunity to customize your journal to your specific parameters and requirements, provided that you enter sufficiently detailed notes and tags for your trades.
A wide range of securities is currently supported on the EdgeWonk trading journal, including stocks, futures, forex, CFDs, commodities, and even cryptocurrencies.
One of their flagship features is their trade simulator. This feature alone is worth the cost of the software when traders consider the backtesting capabilities of the simulator.
After enough trade data has been input into the system, the simulator can simulate trade scenarios and provide traders with an insight into whether or not their trading strategies would be successful based on specific indicators, time frames, and other data points.
Other noteworthy features in the EdgeWonk trading journal are their efficiency analysis, chart books, instrument performance, and trade management analysis function.
Despite the well-designed interface and the advanced functionality of the product, the price of the software remains reasonable.
Currently, their web-based 3.0 version is available at an annual subscription of just $169. Regrettably, their 3.0 pricing remains reasonable, but it is considerably more than they charged for their previous 2.0 version.
Those of you familiar with their previous price point of $169 for a lifetime license may be disappointed by the companies decision to move into a subscription-based model.
While EdgeWonk’s trading journal is a great tool to have in your kit, the software is not without its shortcomings.
Despite its wide range of offerings, the trading journal is specifically designed for traders who use popular forex brokers like MetaTrader4. Unfortunately, for those of you reading this from the United States, there is minimal functionality for US-based stock traders, and the broker import tool is virtually non-existent for most US brokerages.
Lastly, the software is most useful for volume traders. Those of you who trade as a hobby or as an extra way to make some income on the side will be unlikely to find much value in this particular product.
Using MyFxbook as a Trading Journal
MyFxbook is one of the first social communities for forex traders that is entirely free to join.
It provides you with the ability to connect your forex trading account to the platform and utilize their advanced trading analysis software to analyze your trades and develop a more meaningful understanding of your trading habits.
Using MyFxbook provides traders of every skill level with several advantages.
Beyond simply allowing traders to organize and track all of their trading systems in one place, MyFxbook will also allow for the opportunity to follow more experienced traders in the community and give more inexperienced traders a chance to learn from their strategies and techniques.
For the more experienced trader looking to manage other people’s money, MyFxbook will allow you to audit your trading results and demonstrate them to potential clients without needing to spend your time doing the calculations manually.
If you are looking for a trading journal and are not in a position to invest in purchasing one, then MyFxbook is a fantastic resource to have at your disposal.
While it is only available for traders looking to trade in the forex markets, it has the functionality to connect directly with your MetaTrader4 account and provide you with some extremely valuable data, including your average daily profits, the number of shorts won, and the number of longs won.
Those interested in trading forex and taking advantage of this platform can signup for free here. The signup process is straightforward and should not take longer than several minutes.
Once you have activated your account, you will have the option to add your forex account from the “settings” menu and then navigate to your portfolio tab to analyze your performance and see how you can improve your trading.
While they are not always utilized, trading journals are handy tools that traders can take advantage of to identify their overall performance and areas for improvement. They can be used to do anything from tracking statistics to preparing for the dreaded tax season.
At the beginning of this post, we noted that every tradesperson needs their toolbox and that a day trader is no exception.
Although this remains true, the saying itself is incomplete; the other half is that the tools themselves have no value whatsoever if the tradesman using them doesn’t have the skill to employ them successfully.
Unfortunately, there are no substitutes for discipline, focus, and hard work.
No trading system or piece of software, however sophisticated, can replace these attributes. If you want to succeed as a day trader, then you will need to take the time to develop your skills and improve your performance through practice and hard work.
Dylan is both a trained lawyer and an experienced financial content writer from the United Kingdom . He specializes in writing about the US markets and has developed a keen interest in cryptocurrencies and decentralized finance.