Why do I need a Trade log?

The Primary function of the Trade log is to save time, a simple and affect tool for recording every individual trade into your trading journal. I use it every time I am trading.

There is never enough Emphasis’ placed on the importance of keeping good records. This is one of the essential ingredients that separate the successful well disciplined trader form the Ex trader.

Every successful well disciplined trader keeps a trade journal. Every aspect of each trade is logged. They record the technical data, the history and functionality of each trade and what made them take that trade. Most importantly they record how they felt as they went into, through and exited the trade.

All this information is essential to track performance, follow strategies to learn from mistakes and work out plans for continual improvement. It is an essential ingredient in a profitable trading tool kit.

As the old saying goes “A blunt pencil will always remember a 100% more than the sharpest mind”.

Record keeping most of the time is considered time consuming and non-productive, especially if you’re just beginning and don’t know how to do it, which means a lot of time it is the forgotten. This can be devastating to not track your performance, how are you ever going to know when you are improving.

Few words of wisdom:

The inability to enter into a trade also demonstrates a lack of discipline in sticking to the trading system. Either it’s a “go” for the trade or it’s not. If a trader’s system has too many poorly defined areas, it should be changed. Trading should be mechanical; either the squares are filled-in or its no trade. Simple, but ego wants to shine and show that it is special and better than some mechanical system; that the trader is better than that.

Also, many traders may be trading money they can’t afford to lose. This puts even more pressure on being right (not being wrong) and that is why trading capital should be assets—that if lost—won’t affect the lifestyle of the trader. Not only that, a good system establishes a minimum account drawdown limit; it’s like setting a stop-loss on your trading account. If you hit a predetermined drawdown level, trading comes to a stop until real changes are made-either in the system or the trader’s mental-emotional outlook.

But just talking about these things is not enough. Most of us aren’t very good at giving ourselves a valid self-appraisal. What we need to do is establish a frame- work of not only how to trade our system but also how to manage emotions and mental discipline. A trader needs to establish procedural constraints and then learn how to match feelings and thoughts to the trading process. But how does a trader not only train themselves in the discipline of trading but also how to validate that they are indeed being honest in self-evaluation of what they are doing right or wrong?

Being able to deal with the losing trades is what separates successful traders from ex-traders. As a matter of fact, it has been shown many times that it’s not so much the system as it is the trader’s ability to maintain the proper mental discipline and emotional understanding that gives the seasoned trader the ability to take the higher ground. One of the intangible benefits of learning to become a successful trader is the fact that you usually become a much more honest and introspective person. You learn to honestly appraise your performance and probe your weaknesses. You learn to stay humble, focused and accepting of things you can’t control. All of these things do more than make just successful traders; they can make for success in life.

In conclusion one of the most essential ingredients in a profitable trading tool kit is keeping accurate records of each trade logged in your journal.