JOURNALING
The first step in developing your craft as a profitable trader is becoming a disciplined trader. The best way to do this is record, review and improve your work consistently.
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You shouldn't see this as a chore, your not a school being forced to record your work. Reviewing your trades will make you a better trader and consequently earn more money.
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A trading journal is crucial, you need to note down every single trade and details of the trade including;
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-The price you entered at
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-Why you entered
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-Where your stop loss was placed
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-Where your target was placed
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-Did you win or lose
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-Amount won or lost in pips and money
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-Percentage gain (+ or -)
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-The currency pair which you traded (e.g.. EUR/USD)
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-What was the amount you risked(in pips and money)
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There are many reasons why a trading spreadsheet is worth its weight in gold:
-Firstly you can easily track your progress
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-It’s also a great opportunity to show off your results; further down the line you may even start managing other peoples’ money or work for a hedge fund.
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-It may be that you are more successful and profitable on a certain pair, your spreadsheet will show you exactly which pair most profitable. You could then re-focus more of your efforts on to that particular pair to improve your overall percentage gain.
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-By journaling you also minimise the risk of potentially destructive trading behaviour.
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-It reinforces your trading plan and stops you deviating from it.
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-Journaling your trade setups before you enter a trade will also give you time to really consider the trade; which blocks any irrational thoughts or actions such as “jumping the gun”.
The second part of journaling should be your note taking.
Before even entering a trade you should write a short paragraph as to why you are thinking about entering a trade. Comment on all the confluences you have learnt and all the reasons why you should trade. This not only improves your understanding of the markets but it will give you conviction when trading.
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When you are trading with conviction you have a positive mindset and you are confident in your decision making. This is exactly what you need to tackle the market.
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If you are nervous or unsure of a trade, this will show in your notes which should tell you that the trade setup isn't worth getting involved in. If this is the case then forget about that setup and move on.
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You should make a habit of writing down descriptions of the pairs you are looking and key levels which are proving to be significant because the more you study each pair and think of it as a human personality the easier it will be to understand what makes it move.
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EXAMPLE OF NOTES:
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- Heavy selling pressure as you can see from my arrows
- 1370.00 proved to be a really strong resistance
- Downtrend starting to appear
- Descending wedge
- Break of significant trend line, daily candle break and close
- Multiple targets
- Target 1 coincides with .0618 fibonacci retracement
- Be careful of this blue box area as this has the potential to hold as support
- To be on the safe side you could wait for a clean break and close of this box to enter