Journaling as a trader can often feel abundant and burdensome, but it is necessary for optimal execution as a trader. Keeping track of your actions in the market, youe motions, and holding your past self accountable for your actions is a great learning method.
Some people are unable to spend a lot of time writing entries in their trading journals due to other time-consuming matters at hand. Picking a journal method that works for you is going to be crucial to ensure journaling and self-reflection throughout your trading journey.
There are many different trading journal methods that can be optimized and adjusted to fit your schedule and preference. In this article, journaling solutions for all different types of traders are laid out thoroughly. I'll be going over these different journals and giving detailed examples of each.
Journaling your trades is one of the most important things to do as a trader. It allows you to reflect upon your trades; losses and profits alike. Through this reflection process, you can see when, what, and how you executed well, and what there is left to work on.
This post-trade reflection is crucial in enabling you to find your own strengths and weaknesses, enabling you to react to them accordingly in the future. Being able to critically assess your execution is pivotal to your trading success.
Journaling also provides a pre-trade reflection upon the trade idea. You often want to create a journal entry for the trade you are looking to place before placing it. If you examine the trade idea before actually placing the trade you will often find yourself stopping in your tracks, noticing flaws in the trade idea.
"Trading without a diary is like shaving without a mirror" -Dr. Alexander Elder
What a Trading Plan is and how to create one is a process we have a step-by-step guide for here.
In your journal, you want to include the position’s specifics such as the time of entry, entry price, stop-loss price, take profit levels, position-sizing, and margin. On top of these basic trade entries, you want to log what was going through your mind when evaluating the trade, why this setup is better than others, what all the things you like about the setup are, and how the setup abides by your trading plan (a guide to creating a trading plan can be found here). It is a good idea to have your trading plan and rules marked out at the top of your journal so you can always refresh yourself on your plan.
Although you want to keep your trading journal short and easy to review at later dates it is crucial to cover subjects unrelated to the trade setup that can quickly become a little bit more time-consuming. One of these unrelated topics to your mindset before you begin any given trading day. At the beginning of the trading day sit down and reflect upon and write down your current emotional state and how you feel.
Log times you felt fearful, greedy, or mad. These are all common experiences as a trader, knowing when and why you felt them will be a key lesson.
End-of-day summaries are also helpful to reflect upon the day’s session(s). This gives you the opportunity to reflect upon your emotional state and trading day in tandem and assess how they affected one another. You can also use this final reflection to reflect upon your mistakes and strengths of the day while they are still fresh.
When writing your daily trading journal entry(s) you’ll want to reference back to and show the chart setup you were trading. This can be done by taking screenshots and adding them directly into your chosen file journal format or by creating screenshots on TradingView and only adding the screenshot reference link into your document.
A typical Word document or another traditional writing format will suffice for most traders. In the long-form writing format, it is easiest to journal your emotional state for the day while also logging trade technical.
By beginning with your daily journal entry with mindset analysis you can get your mental state clear and on paper. Understanding how you are feeling on any given day will give you mental clarity for the rest of the day.
Next, write a short paragraph about what the general market is doing just to clarify your directional bias and what your directional invalidation is for the day (this can easily change due to unforeseen market movements).
Now it is time to assess and log a possible trade. Write down why a given trade setup looks good to you and how it abides by your trading plan before placing the trade. You may find that this trade setup actually does not abide by your trading plan and looks less good than you initially thought it did.
If you catch yourself nearly placing a poor trade, the trade idea should not necessarily be deleted from the journal, instead, write down a paragraph about why you decided not to enter the trade.
Finally, if you do find a good setup, have written out your thoughts, and decide to enter you would write down your trade technicals like the entry price, stop-loss price, take profit levels, and margin level (if applicable).
You may also like to add screenshots of the trade setup directly into the journal instead of links. A direct screenshot is more easily assessable and creates a clear overview. This way you get a more detailed overview of the trade setup you took/wanted to take when reflecting on the trade. There is sufficient space to do so in this format.
An example of this format is provided below. Although not implementing all the aspects of an optimized journal it is a good example of what a short-form journal entry would look like on Word. This format likely provides the richest and most coherent trading log you can provide yourself with in your trading journey.
A secondary, less time-consuming, and very common version of trading journals is the use of an Excel sheet. Excel sheets provide you with a clear overview of all the statistical and technical aspects of your trading entries (See Fig. 2).
Excel makes your trading journal feel more structured and for certain traders, this certainly is a better and more efficient journaling solution. A downside of the use of an Excel sheet is that it makes it rather difficult to journal long-form content like your emotional state, market overview, and trade overview. Excel sheets also limit the possibility of adding screenshots of your trades directly into the journal making it impossible to create an instantaneously coherent review process with images.
For many traders coming from more technical backgrounds, this is the easiest, quickest, and most accessible format to journal in. It also requires much less time than a Word journal while still providing a good overview of your trading sessions.
Since it is difficult to express a long-form emotional reading of yourself in excel, It would be best to start a traditional journal on the side in which you cover only your daily emotions and life conditions. This way you still get the benefit of putting on paper how you are feeling each day and can pull it up next to your trading performances and find a correlation between your trading performance and emotional states.
Here is another trading journal example. This time a Excel Trading Journal.
The most time-efficient version of journaling would be recording your screen, showing the live chart, and narrating your trading process to yourself. You speak your thoughts about the market and trade setup out loud while explaining what you see on the chart. This can be done on programs such as OBS, Loom, or any other screen recording software that you find accessible.
A downside of this journaling method is that one must be diligent in avoiding tangents. It is easy to get caught up speaking to yourself about trading and going on tangents about things that aren't relevant to this particular journal/trade entry. As a solution to tangents, you may want to have a text document with an outline of the relevant ideas to cover during your journal entry.
So, although recording can easily be the least time-consuming version it can also quickly become the most time-consuming when done inefficiently.
Journaling your emotions is crucial, but doing so out loud can be quite uncomfortable, therefore a recorded journal can make it difficult to express your emotional state that day. If you decide to use recording as your method of journaling your trades having a traditional/normal journal on paper or a word document to log your daily emotions and headspace often remains a good solution.
A combination of all of the formats mentioned above may also be optimal for some. Having a method that is most efficient for you is key. You may want to take a recording of the trade setup, explain it, and then insert the link of the recording into your Excel/Word document, or any other combination of the different formats
As we established, a trading journal is immensely important to trading. But I hope to have shown that keeping a traditional daily journal that logs life events and emotional states is just as central to trading. Daily journals assist you in putting your mind right and knowing how you feel about events that occurred on a given day.
Anything that is bothering you in your life outside of trading directly affects your trading, therefore keeping your life outside of trading in order is necessary for optimal trading.
It really all comes down to experimenting with all the different forms of journaling and seeing which most fits your style. Find a way to ensure that you journal; make it fun for yourself. Being able to look back is going to be of immeasurable value to your future self, your future self will certainly thank you for illuminating all your current mistakes and emotions so bravely in a trading journal.