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Talk to any trader, and we can bet that they are searching for the holy grail of success. Seasoned traders have grown to figure out that there isn’t a holy grail or secret, so to speak. A successful trader plans and knows which tools are best suited for the job.
A trading journal happens to be the most powerful tool in any trader’s arsenal. It can help a good trader become better. A journal, as you might have already guessed, is a written record of what is happening during a given trading day. You should add essential factors like the day’s market conditions, sizes of each trade, prices, expiration times, success rate, and your own emotions. Make sure to customize the journal entries so that they fit your style of trading.
Sure, some people may balk at the thought of keeping a trading journal because, after all, it is tedious. That said, recording your trades will help to keep you consistent and accountable, which means disciplined, and that is what pays off in the long-run. Let’s look into other reasons why a trading journal can make you a successful trader.
Helps You Identify Market Patterns and Trends
You can use the notes to analyze which of your trading strategies are working and which aren’t. You should take note of the various charts you’re using, also the patterns you’re watching as well as how various events are impacting your trading abilities. What this will do is help recognize the mistakes you might be making, which are costing you a lot of money.
For instance, you’d probably come to the realization that you’re exiting trades too hastily which is costing you money. You could also be setting the wrong limits and also in the wrong places. You could also be falling victim to incorrect signals. So, primarily a journal will help prevent you from repeating those mistakes.
Hone Your Trading Technique
When you have a detailed record of all the past trades, it allows you to identify weaknesses. Remarking about how you feel each day is a good idea because it can help you realize if your decisions are driven by emotion, which is hurting the trade. A journal will reveal what type of trader you are and what needs to be focused on to improve your skills.
Keep an Eye on Progress
If you have been a trader for a very long time, it can be hard to gauge success. When you write down everything, i.e. your goals, it helps you keep things on track. It also helps to keep you motivated and inspired by looking back at where you started from and how far you’ve come. Not to mention that having a trading journal will help you keep an eye on your growth as a trader, which in turn will instill more confidence.
As you can see, there are numerous advantages to having a trading journal. However, these are just the tip of the iceberg. Keeping a trading journal does not have to be tedious, it is up to you how it is made fun so as long as you keep track of all the useful stuff. So, what are you waiting for? The time to start keeping a journal is right now.
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