If you have, or are currently, keeping a trading journal of some description, then it probably sits under one of these three headings;
- A trading log – a record of the trades you have taken, entry levels, size of trade, exit prices, pips/points accumulated. It may also, contain some thoughts and observations, and analysis of the trade. This might be in a spreadsheet, in a notebook, or annotations on a print-out of a chart.
- Trading metrics – statistical data on your trades, for example, number of trades made, number of winners and losers, average winner and loser, expectancy, longs v shorts. This might be manually kept, on a spreadsheet for example, or it might be provided by specific software.
- Psychological (mind) journal – this type of journal typically focuses on helping traders to bring greater awareness to the psychological factors that impact their trading decision making, such as what they are thinking or feelings and where they are focusing; it may also include opportunities to set, reflect on, and work on goals and development targets.
When most traders think about keep a trading journal they typically think of a trade log. A trade log is essential for traders, because it enables traders to be able to reflect on their trading decisions, to assess their successes and failures, to learn from them and to improve their trading performance.
Two very important elements are often missed out when traders keep a trading log;
- Observations about what they were thinking and feeling.
- Real time entries – noting down thoughts, feelings, changes of mind, in real-time as they happen.
Trading metrics are like a mirror that traders can hold up to reveal their trading behaviour. A well-kept trading log will enable useful data to be collated, and then analysed, although now, the ability to access such data is becoming more readily available through trading platform providers and specific trading metrics software.
The journaling that many traders do the least of, is psychological journaling. A trade log and trading metrics are both in the more objective domain, numerical, and tangible. A psychological journal can feel somewhat intangible, hard to structure, and possibly daunting, or maybe uncomfortable to keep.
A well-structured psychological journal, or mind journal, can provide a very useful way for traders to;
- think about their thinking
- reflect on their trading emotions
- gain insights into their behavioural patterns
- get mentally prepared and ready for the markets
- reflect on their performance – daily, weekly and monthly
- set and review goals
- develop self-reflection and self-coaching skills
The combination of keeping a trading log, reviewing trading metrics, and maintaining a mind journal, creates a robust platform from which traders can gain a variety of objective and subjective insights into their trading behaviours and decisions, which when acted up on can enable them to improve their trading performance.
What journaling are you currently doing in your trading?
What could you do to improve your journaling process?