The trading journal is often overlooked as a vital resource in the trading arena. At first glance, maintaining such a journal may feel like a chore, and many traders struggle with the commitment and discipline required to regularly update their trading records.
However, for those who persevere and maintain a trading journal over time, it can be an invaluable asset on the path to becoming a successful trader.
Achieving profitability in trading involves analyzing what works and what doesn’t with each trade, which in turn enhances decision-making and helps avoid typical trading pitfalls.
In this guide, we will explore what a trading journal entails, how to set one up and highlight some of the top trading journals on the market.
What is a Trading Journal?
A trading journal is essentially a diary where you jot down everything about your trades. If you’re serious about trading, maintaining one is crucial for managing emotions and assessing how well your trading strategies perform.
Many forex traders fall into the trap of letting emotions dictate their decisions. By documenting your trades, you can see how your choices are shaped by both your strategy and your feelings. This insight can clarify your actions and enhance your trading techniques over time.
The primary aim of a trading journal is to evaluate the effectiveness of your trading plan and ensure you adhere to it. Having a solid plan is vital, but it becomes meaningless if you can’t follow it. A journal supports you in staying on track.
These journals can be tailored to fit any market and can take any form, from a simple notebook to a detailed Excel sheet. This article will guide you on what details to log and how to review them to improve your trading performance.
Keeping a trading journal demands time and effort, but when used correctly, it can become one of your most powerful trading tools.
What are the Benefits of a Trading Journal?
Keeping a trading journal is straightforward but can yield excellent results if maintained consistently. Whether you use pen and paper, a simple Excel spreadsheet, or dedicated trading journal software, tracking your data is crucial. This habit helps you craft a successful strategy and avoid repeating past trading mistakes.
The main benefits of maintaining a trading journal are:
- Discovering Your Trading Style: If you find that day trading causes stress and poor risk management according to your journal, you might be better suited for swing trading. This approach involves holding positions longer, allowing more time for analysis and less pressure for quick decisions. Experimenting with different currency trading strategies can help you find the most suitable trading style.
- Recognizing Strengths and Weaknesses: Regular journaling reveals patterns over time. You can pinpoint your core strengths and weaknesses, which will help you choose the right trading style and strategy.
- A Valuable Source of Knowledge: No trader knows everything and continuous learning is essential since markets evolve, strategies become outdated, and competitive edges vanish. By observing the market and recording insights in your journal, you may discover new advantages for future trading success.
- Discipline: Over time, maintaining a trading journal will transform from a tedious task into a routine aspect of your trading activities. It serves to enhance a trader’s consistency and instil discipline.
- Data integrity: Incorporating trading statistics into your journal significantly enriches the process. These statistics, combined with your observations, provide valuable insights. While initiating a trading journal is relatively straightforward, maintaining consistency poses a greater challenge. Additionally, a trading journal is inherently personal; there is no universally correct method, as each trader must determine what aspects are most significant and how to organize their entries.
- Emotional mastery: Monitoring trades is an effective strategy for analyzing behavioural patterns and gaining insights into your trading psychology. While it is impossible to eliminate emotions from the trading process, documenting your thoughts and feelings during critical moments, such as entry and exit points, can aid in avoiding poor decision-making.
- Enhanced risk management: At its essence, risk management involves evaluating the level of risk you are willing to accept based on various trade factors. By recording each trade in your journal, you may begin to identify areas where your mindset may be misaligned. Adjusting your risk levels accordingly can increase your chances of achieving success and preserving your capital.
List of Forex Trading Journal Software
This article provides an analysis of the best forex trading journal software options accessible to traders, evaluating their features, pricing structures, and the assets they support.
- Microsoft Excel
- Trademetria
- TradesViz
- TraderSync
- Tradervue
- Edgewonk
1. Microsoft Excel
Microsoft Excel serves as the primary tool for traders who wish to initiate their first trade journal. Utilizing a trading journal in Excel provides comprehensive control and a wide array of functionalities, whether by creating a spreadsheet from the ground up or by downloading a complimentary template available online.
For those proficient in Excel, establishing your journal will be straightforward; however, individuals who are not familiar with financial functions and macros may need to invest some time in its setup. It is crucial to meticulously verify the spreadsheet to avoid any errors that could distort your trade history.
Cost: Free/standard license
Supported assets: All financial markets and assets.
2. Trademetria
Trademetria provides the enhancement required for your trading performance through its comprehensive trading journal software. This tool enables users to track various metrics across multiple accounts, featuring advanced charting, backtesting capabilities, journaling options, and integration with over 140 platforms and brokers.
Pricing: Free plan (with limited features), Basic plan (USD 29.95/month), and Pro plan (USD 29.95/month).
Supported assets: Equities, options, futures, forex, cryptocurrencies, and CFDs.
3. TradesViz
TradesViz is a sophisticated online tool designed for forex trade journaling, offering a variety of advanced performance analysis and stock charting capabilities. Notably, its post-trade analysis and visualization feature stands out, providing over 70 customizable base charts that allow users to adjust the granularity of their trading data.
You can initiate a free trial for seven days or opt for their free plan, which includes limited features until you feel prepared to upgrade.
Pricing: Free plan (limited features), Pro plan (USD 19.99/month), and Platinum plan (USD 29.99/month).
Supported assets include stocks, stock options, futures, future options, cryptocurrencies, and forex.
4. TraderSync
TraderSync is a cloud-based forex trading journal application accessible on both desktop and mobile devices via their app available on the Apple App Store and Google Play. Users can explore various features during a complimentary 7-day trial, including intraday charting, trade-specific analytics, trade-sharing capabilities, performance reporting, and additional functionalities.
Utilizing AI feedback, TraderSync eliminates the need for daily manual updates to spreadsheets by automating the entire process and providing insights in a straightforward and comprehensible manner.
Pricing: 7-day free trial, Pro – USD 29.95/month, Premium – USD 49.95/month, Elite – USD 79.95/month.
Supported assets: Stocks, options, futures, future options, and forex.
5. Tradervue
Tradervue is recognized as one of the pioneering online forex trading journal platforms and continues to maintain significant popularity among numerous professional institutions. The platform’s foundation and its functionalities are centred around three primary components: the trade journal, trading analysis, and trade sharing.
It provides a complimentary subscription option with restricted features, allowing users to monitor up to 30 trades each month, which serves as a valuable trial before committing to a paid subscription.
Pricing: Free plan (with limited features), Silver plan (USD 29.00/month), and Gold plan (USD 49.00/month).
Supported assets include stocks, options, futures, and forex.
6. Edgewonk
Edgewonk is a robust online forex trading journal platform offering extensive customization options, advanced analytics, gamification elements, and a comprehensive array of supported assets.
Both regular and professional traders can take advantage of the numerous sophisticated features available, allowing them to document their trades from any location and device, facilitated by Edgewonk’s web-based cloud infrastructure. The platform boasts a user-friendly interface with both light and dark mode options, and its pricing structure is set at a competitive fixed annual fee.
Price: Pro plan (USD 169.00/year)
Supported assets: Forex, stocks, futures, CFDs, cryptocurrencies, and commodities.
How to Create a Trading Journal?
Now that you see why a trading journal is important and know that consistency is essential for trading success, here are four steps to create your journal.
First, decide how you’ll keep the journal: whether with pen and paper, an Excel spreadsheet, or using trading journal software.
Then, determine what details you’ll track, such as the trading instrument, whether you’re taking a long or short position, the date of the trade, the strategy applied, the reward-to-risk ratio, and the outcome of the trade.
Once you’ve placed stop losses and set take profits, make sure to log your trades in the journal. This step is vital and needs your consistent and careful attention.
Finally, after your set period—whether daily, weekly, or monthly—review your performance. Analyze your trades to assess your progress and identify improvements for your trading strategy.
What Should a Trading Journal Include?
A successful trading journal, in its most basic form, comprises several key components, including:
- The date and time of each trade
- The financial instrument involved
- The size of the position
- Whether the position is long or short
- The entry and exit points
- The outcome of the trade upon closure
To enhance the assessment of one’s trading style and performance, additional elements may be incorporated. It is important to note that there is no definitive method for maintaining a journal; it is a customized tool designed to assist individual traders in analyzing and refining their trading strategies.
Additional features might encompass charts, commentary on market conditions, and the rationale behind initiating the trade.
Steps to Journaling a Trade
If you’re dedicated to trading, keeping a trading journal is a valuable way to improve your future trading success. By carefully analyzing each trade afterwards, you make sure you’re using trading journals effectively from every experience.
1. Start by recording every trade you make. Decide on the key details to track, like the type of asset, entry and exit prices, and the size of the trade. Make sure to update these details after each trade throughout the day.
2. Capture a chart image at the point when you enter the trade. Mark it with important details such as buy and sell points, technical indicators, support and resistance levels, and trendlines. Include this annotated chart with your journal entry.
3. Write comprehensive notes about the trade. Describe it in your own words, either directly on the chart image or in a designated section of your journal. Be sure to note whether the trade was successful or not and explain why.
4. Finally, review your data, notes, and chart images. Reviewing all your trades for the day helps you identify any mistakes and find opportunities to refine your trading strategy.
How to Review your Trading Journal?
At this stage, you should have accumulated several rows of trading data in your spreadsheet, allowing you to analyze it to enhance your trading performance. The following are some recommendations for effectively utilizing a trading journal and interpreting the data.
Consider the following aspects:
- Identify patterns that resulted in losses.
- Examine the notes along with the trade entry and exit points associated with those losses.
- Identify patterns that contributed to successful trades.
- Review the notes and the trade entry and exit points related to those successful trades.
- Refine your approach based on these observations to reduce losses.
- Enhance your strategy based on these insights to increase profits.
Reasons why people don’t use a trading journal
Let’s delve into why traders often avoid starting or maintaining a trading journal.
Time
For short-term traders, a journal might seem like it takes too much time. New traders often say, “I need to watch the markets, not write in a journal!”
While it’s true that profits come from spotting opportunities, not from writing, you don’t need to record every trade. Instead, make brief notes when something noteworthy occurs. In the evening, when things calm down, you can summarize your trading day and key insights.
Journaling shouldn’t feel like a chore. If markets are quiet or there’s nothing new, it’s fine to skip a day.
Facing the Truth
A journal is most helpful when you’re honest with yourself. Avoid excessive negativity. Phrases like, “I had a terrible day! Is this worth it, and will I ever succeed?” don’t help. Concentrate on identifying mistakes.
Example: “I spotted a good trade but got overwhelmed by too much information and exited too early.”
To fix this, perhaps the trader spends too much time on Twitter, and reading various tweets makes them doubt their decisions.
Conclusion
Maintaining a trading journal is crucial for all traders. It offers crucial insights, sharpens your trading strategies, and improves your decision-making skills, making it a vital tool for success in the complex trading environment. This journal acts as your ally, recording each trade, choice, and feeling.
Its straightforward nature is its greatest asset. By consistently jotting down your thoughts and experiences, you uncover your strengths, weaknesses, and recurring patterns. This practice enables you to make well-informed decisions, refine your strategies, and carve out a successful journey in the dynamic world of trading.