Trader’s diary. Why and for what you need it?

But then, something happened. I started having consecutive losing trades, and I couldn’t figure out why. My account balance was shrinking, and I was desperately searching for what the problem was. I blamed my losses on the fact that the market was against me, that I was picking the wrong stocks, or that I was just plain unlucky.

In contrast, most of my friends who were diligent in keeping a trader’s diary could look back at their entries and pinpoint the exact reason for their losses. For example, one of my friends realized he was trading at times of the day when he was tired, which led to emotional decision-making. His results improved significantly when he started trading only when he was well-rested.

Another friend was taking losses because they were unaware of major news events that were coming out. Had they looked at an economic calendar these losing trades could be easily avoided. Another friend of mine realized that she was letting her losses run for too long, which meant that she ended up eating into a lot of her profits.

However, once she started cutting her losses sooner, she stopped having losing streaks and increased her overall profitability. It wasn’t until much later that I realized that the reason for my losses was that I did not have a trader’s diary.

It’s important to identify patterns not only when you’re winning, but when you’re losing as well. When you’re winning, it’s easy to keep track of your trades and know exactly what’s working. But when you’re losing, it’s much harder to keep track of your trades and figure out what went wrong. Plus, the emotional impact of losses can make it even harder to remember everything clearly.

That’s why a trader’s diary is so important. It can help you keep track of your trades, figure out what works and what doesn’t, and learn from your mistakes.

It can be as simple as a spreadsheet with the following columns:

– Date

– Stock/Instrument

– Action (Buy/Sell)

– Price

– Stop Loss

– Target Profit

– Result (Profit/Loss)

You can also include additional columns for things like the reason for the trade, how you felt during the trade or any other comments. The important thing is that you consistently record all the information for each trade.

Some people like to keep a physical diary, while others prefer to use software like Excel or Google Sheets. I find it easiest to keep my trader’s diary in an app on my phone, so I can quickly record the information after each trade.

There are a few different apps that you can use, but my personal favourite is Trade Journal by TradingView. It’s free to use and has all the features I need. Alternatives to Trade Journal include Edgewonk, TradeBench, and Tradervue.

Helps You Learn From Mistakes

One of the main reasons to keep a trader’s diary is that it can help you improve your performance. A trading diary can also help you identify positive patterns, so you can see what works in your winning trades. However, perhaps more importantly, a diary will help you identify your mistakes so you don’t fall into the same traps moving forward.

One of the best ways to become a better trader is to learn from your mistakes. What separates the good traders from the bad ones is that the former learn from their mistakes while the latter does not.

For example, let’s say that you notice that you tend to have losing streaks when you trade without a stop loss. If you didn’t have a diary with records of every trade, you might not have realized that you were making the same mistake repeatedly.

Similarly, you might notice that you tend to make impulsive decisions when you trade after a loss. One of the biggest mistakes most traders make is trading with emotions. Diary entries help you identify the patterns in your losses so you can make different decisions moving forward.

By recording every step of the trade, including how you feel, you can start identifying when your emotions are affecting your trading. Then, you can take steps to control your emotions, leading to better trading decisions.

Reduces stress

Another benefit of keeping a trader’s diary is that it can help reduce stress. When you’re in the middle of a trade, it’s easy to get wrapped up in the emotions of the moment. When you’re in the heat of the moment, it’s easy to let your emotions take over and make impulsive decisions.

After all, fear and greed are two of the most powerful emotions, yet they are hardwired into every human being’s response. Will the trade go as planned? What if it doesn’t? What if I lose money?

These are all common questions that run through a trader’s mind and can lead to a lot of stress. Conversely, you may also become overconfident when you’re on a winning streak. You might start taking more risks than you should, and as a result, you can lose all of your profits.

A diary can help you keep things in perspective. When you look back at your trades, you can see them for what they are – wins and losses. Some will be big, and some will be small, but in the end, they all even out. By keeping a diary, you can avoid getting too stressed out about any one trade.

Boosts confidence

In addition to reducing stress, keeping a diary can boost your confidence. When you look back at your trades, you can be sure that the winning trades are not the result of luck or chance. You will know that you made the right decisions based on your analysis and can have confidence in your trading strategy.

On the other hand, when you see a losing trade, you can be sure that it wasn’t just bad luck. You can analyze what went wrong and take steps to prevent it from happening again. In either case, keeping a diary will give you more confidence in your trading decisions.

Gives you an edge over other traders

Lastly, another benefit of keeping a trader’s diary is that it can give you an edge over other traders. Most traders believe that trading is just about buying and selling. However, the reality is that there is a lot more to it than that.

The best traders are the ones who take their work seriously and who are always trying to improve their skills. By keeping a diary, you take the guesswork out of your strategy and can constantly analyze your trades looking for ways to improve. This will give you an edge over other traders who never take the time to review their trades or learn from their mistakes.

However, there are a few key points that you should keep in mind when creating your diary:

Be specific

When recording your trades, be as specific as possible. Include the date and time of the trade, the asset you traded, the direction (buy or sell), the price you entered, the price you exited at, and your thoughts and feelings about the trade. The more specific you are, the easier it will be to review your trades and identify patterns.

Be honest

It’s essential to be honest when recording your trades. Don’t try to sugarcoat your losses or make them sound better than they are. Keep your entries objective. The whole point of the diary is to help you improve as a trader, and you can’t do that if you’re not honest with yourself.

Print Out the Charts

Print out the charts you used to make your trading decision whenever possible. This will help you to visualize the trade and see what influenced your decision. Including any indicators or other technical analysis tools is also a good idea.

Set up a diary for each trade and system

If you use more than one trading system or strategy, it’s a good idea to set up a separate diary for each. This will help you track your progress and see which system performs best. It can also be helpful to have a general journal where you record your thoughts and feelings about trading in general. This is an excellent place to record your goals and thoughts about your trading career.

Be consistent

Finally, be consistent when recording your trades. Try to record every single trade, even if it’s just a quick note. The more trades you record, the easier it will be to identify patterns and improve your trading.

What should be included in a trader’s diary?

Be specific when recording your trades and include the date and time of the trade, the asset you traded, the direction (buy or sell), the price you entered at, the price you exited at, and your thoughts and feelings about the trade.

What is the easiest way to create a trading diary?

There are several software programs available that can help you create and maintain your trading diary. Alternatively, you can create a spreadsheet in Excel or Google Sheets.

How often should I review my trading diary?

It is best to review your trades daily, at least shortly after the market closes.

What is the best way to use a trading diary?

The best way to use your trading diary is as a historical database of all your trades and the conditions of your trades so that you can learn and improve your trading performance over time. You can also use it to identify potential opportunities you might have missed and capitalize on them on your next trade.

How do I find the time to keep a trading diary?

This is often the most challenging part of maintaining a trading diary, but it is vital to make the time to do it. One way to ensure you keep up with your journal is to set aside a specific time each day to review and update it.

Conclusion

I hope this article has offered a solution for you if you are looking for ways on how to keep a trader’s diary. This is an important tool for all traders, regardless of experience level, and can help you improve your performance over time.

If you are new to trading, I recommend you start by keeping a simple journal to get into the habit of recording and reviewing your trades. That will also help you to know what worked well and what not. It is important because-

“Risk comes from not knowing what you’re doing.” – Warren Buffett. The top traders are those that keep track of what works and doesn’t work for them — and with a trading diary, you can be among them. It can help you keep track of your trades, figure out what works and what doesn’t, and learn from your mistakes.