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How To Keep A Trading Journal

A reader of mine wrote in, “Trading journals are frequently mentioned but rarely the specifics of what should be in them, tried and tested formats, and, best ways to
review them covered.”

Every successful trader I know keeps a journal or one kind or another. I like to write journal entries, others like to type them into a computer. It might be splitting hairs, but I don’t call them “trading journals” either. To me, they are just Journals and I write everything in them. I rarely write trades in them, that’s what a General Ledger is for.

You should date and time stamp every page that you write on so you can create a chronology. I’d write down whatever is important to you: goals, how you plan on achieving them, in what time frame, thoughts and feelings that you have about your life, and thoughts and feelings that come up in and around your trading.

If you don’t keep a General Ledger because you rely on your monthly statements, that’s too bad for you. You’re missing out on a great way to capture some of your behavior. If you write about your trades before you put them on, they appear much more real. More important, you might find yourself feeling much more connected to your money. One of the potential benefits of that is that you may gain some insight on the importance of keeping your losses small.

I keep several journals going at one time and each contains specific things. You can put everything into one, but I find they are harder to read afterward. I like to consolidate my thoughts and then I create a chronology of all my thoughts and behavior.

If you’re afraid to write down your feelings about a trade or put what you’re thinking about a trade in writing, you’re “closeted.” They are your feelings – own them. You also have a good entry point for your next Tribe Meeting…

In my experience, know-it-alls fear commitments because they might shine the light on their true level of knowledge, which is normally not as high as they’d like everyone to believe. They are the worst type of trader (and people). However, if they can learn to surrender their egos, they may have a chance before they vaporize tons of cash.

You can journal about other things too such as food & beverages (and portion sizes), phone calls/interruptions, and when you feel you need a nap. You can journal what it feels like before you meditate during the day and how you feel after. Time stamp everything. Sometimes I’ll even write in a “to do” list just to keep myself honest. I’ll go back to the list to see just how important all the “to do’s” were and what were the results of getting them done were and how the results have impacted my life, business, or trading.

You can write down how many Diet Cokes you’ve had, along with the times that you had them. You can write about how each of them made you feel, and how you feel about drinking “n” number of cans of diet coke over the course of the day. How many have you had all week. By writing the time down, you can also marry your food habits with your feelings and then conjugate everything with your trading.

Maybe you find that you’ve consistently made losing trades 45 minutes after your afternoon snack, because you’re crashing from your sugar high and you lose focus and get sloppy.

Ultimately, writing things down can give you clarity on your thoughts and your thought process in general. That saying “what gets measured gets done.” But I think what’s more important is “what gets measured can be improved upon.”

There are an endless amount of things you can learn from keeping a journal. But the goal is to learn about yourself and your behavior first, then you can see how it may or may not affect your trading.

I use these Moleskine Journals/Cahiers. They are not lined, so I can draw charts and diagrams and connect a bunch of things with lines. I’m a “pictures” guy, so I like to see illustrations and draw them for things I’m working on.

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  • Yep, a journal is an important element in trading success. I too keep a Moleskine (large, ruled) plus a more quantitative one at stocktickr.com for its detailed reports and data analysis tools.

  • Gavin Murphy

    For what it’s worth and as an example, the last chapter of Dr. Alexander Elder’s book ‘Come Into My Trading Room’ has an excerpt of his trading diary, with reasons for entry and exits and some annotated charts.
    The trading journal also acts as a backup to check your trading statements, which I would definitely recommend as brokers do make mistakes.
    Mike, when you mention that you keep several journals going at one time and each contains specific things, can you elaborate as I have tended to use one consolidated journal and kept trading ‘ideas’ separate, but not in journal format?

  • Anonymous

    Many people mistake “journal” for “diary,” but if you’re a very creative
    person like me, you might need a place to keep track of all your ideas. Here
    are a few hypothetical examples of different journals you might keep:

    1) blogging journal – for ideas to develop
    2) trading ideas
    3) personal goals
    4) teaching journal

    Some ideas are brilliant unto themselves, others need development. That’s
    where the journal comes in. Use it as a tool to develop your thoughts, but
    also to review and see how your thoughts evolve. Tie your emotions to it and
    you’ll find the best insight into what makes you tick. Which comes first,
    your feelings or your thoughts?

  • Adam

    One of your best posts yet. Just great stuff you put out. I’ve been keeping a journal since I was a young boy(which mostly likely grew out of intense insecurities) in an effort to understand the connections between things. More recently, over the last three years, I’ve been using a simple mind mapping software to organize my thoughts and journal. I highly recommend the use of such software. It’s fantastic.