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Friday, January 02, 2009

Keep a Trading Journal

Did you make any New Year's Resolutions?

Here is one related to trading - resolve to keep a trading journal and update it every day with every trade. Make a list of questions to answer about each trade, and put them into a template so you can go through and quickly answer each one...the more you simplify it, the more likely you will keep it up day after day. Here are my recommendations for questions:

1.) Why did I enter the trade?
This should cover the setup and what you saw to make you go long or short.
2.) Why did I exit the trade?
Was there a predefined target? (hint - there always should be!!!) Did you exit early because you saw something in the price action that made you think the move was over?
3.) In retrospect, would I take this trade again?
Now that you are looking at it after-hours, was it a good trade (regardless of the profit of lack of)? If the answer is no, explain why.

Of course you want to include the entry time, entry price, what your stop was, what your target was, exit time, and exit price. And always take a screen shot of the chart.

Again - keep it simple. Create a "Trading Journal" folder on your desktop and keep your notes in a single Word document. Save each chart as a .jpg and name the file with the symbol and the date for easy reference.

If you do this one thing it will probably improve your trading tenfold in 2009. The problem is, we all know what we should do - but rarely do we actually do it. Make the commitment today that you are serious about your trading, and as a result you will keep a trading journal and document every trade in 2009.

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13 comments:

Ron said...

"The problem is, we all know what we should do - but rarely do we actually do it."

You are exactly right there X. Great post.

Attitude Trader said...

The simplest things can be the most potent...especially if it allows you to put it to consistent use.

Thanks and Happy New Year!

-AT

Fred N. said...

Very true. I let my journal lapse last year, but plan to keep it up this year and learn from my trades.

All the best in 2009.

Anonymous said...

Hi X,

thanks for the good post. Would you be bale to let me know what program you are using to capture charts and the trend and other notes you might place on it?

Thanks,

EK.

Trader-X said...

EK-

I mark my charts in my charting program, take a screen shot (basic Windows functionality - CTRL+PRNT SCRN) and paste to MS Paint (basic program that comes free with Windows).

If you want you can add text to the chart in Paint - I don't, as I keep my notes in Word.

Dan Robbins said...

This is the first time I've ever read the concept of journaling "would I take this trade again". What a powerful concept to journal! Thanks for that idea - I'm adding to my journal immediately.

Tanner said...

Great post and thought to start out 2009. Thanks and I look forward to hearing the results of your simplifying!

Dinosaur Trader said...

X,

One warning... if you start a journal, be careful it doesn't blossom into a "trading blog" where you rarely talk about trading.

I have a friend who did that and now he spends hours each week blogging like a slave. It's not clear if it has helped his trading.

-DT

Crude Oil Trader said...

The journal is a great idea. I started doing it on a large wall calendar type of format that includes daily index info, etc. Sorta old school, but really works for me.

Stk Trdr said...

Just found your blog. Great advice and I like your trading style.

pupsor said...

Trader-X, try to check SnagIT programm. Its very good stuff for you and me ;) you can make screen shot and quick edit this shot for comments entry and exit. Keep it and thank you for motivation! i'll try to start create anyway my 2009 new trading journal!

MikeH said...

Might want to try Microsoft OneNote for journaling. Easy to create template pages, capture screen shots and recordings and organize them like notebook (pages and folders) any way you want. It's their best application nobody knows about.

Brian said...

Don't forget Jing, a free program that captures screen shots and even a 5 minutes worth of video. You can add arrows, text, and highlights to your charts as well. Here's a link to get it:
http://www.jingproject.com/download/