Trading Journal

If you still have not started your trading journal, you should consider this article from FXBootcamp.

The best players in their chosen field regularly review their performance and seek clues on how they can improve. Top professional athletes are notorious for doing a post-game review. For example, professional golfer Tiger Woods analyzes his performance at each tournament, win or lose. Tiger once explained in a press interview: “Too many people are afraid to look deep down and see where they made mistakes. You have to take an honest look and have an honest evaluation of your performance.”

The best organizations also conduct reviews of their performance. The U.S. Army developed a method for reviewing their military activities. Called the After Action Review (AAR), it’s a structured process for discovering and documenting what happened, why it happened, and how the activity can be performed better in the future.

We estimate that 90% of traders do not exercise the discipline of documenting their trading results. Why do you think the majority of traders lose money? They don’t have the patience to record their trades in a journal and—in the process—learn from their mistakes. Simply put, they don’t want to do the work required to improve their trading game.

Why does not having a trade journal promote failure? Traders who don’t journal their trades can’t easily pinpoint what they are doing right. They don’t know what they are doing wrong. As a result, when they trade, they are almost always “winging it.” Their lack of patience and discipline usually leads them to jump quickly into a bad trade, while disciplined traders wait for more conservative, repeatable trades.

Having a trade journal adds the element of accountability to your trading. By having the trade journal and being in the practice of updating it regularly, you will find that you’ll ‘wing it’ less, and stick to your trade plan more. This will result in the patience needed to trade conservatively and with repeatable performance.

The presence of undisciplined traders is actually good for your trading account. When they lose money, it’ll go to you! As we like to say in Bootcamp, amateur traders “provide liquidity.” Forex is a zero-sum game. You’ll profit from the losses of amateur traders because you are patient and disciplined. You’ll reach the point where you “deserve” the profits because you’ve worked for it—you invested time into refining your trading skills. If you want to be successful in forex, just do what the 90% of other traders don’t do, are unwilling to do, or can’t do. Work for it. Invest the time.

What is the secret to forex trading success? Of course, it’s more than just recording your trades. You’ve got to review each of your trades, learn from them, and use what you learn to improve your trading. This takes a real investment of your time. It could be a whopping 20 minutes a week.

You can create your own online trading journal at MeetPips.com. I've set up mine and we'll be counting my pips every time I trade, this is the new features in my blog. Looking to trade GBP/USD this week in time for their CPI numbers release.