|
Keeping a personalized trading journal of all your market transactions is one of the most valuable actions a trader can perform, it will help you to become a better currency trader. Why? Using a detailed trading journal will help you to recognize and eliminate trading errors you make over and over again, it can turn your weaknesses into strengths.
By grouping your trading errors into classes such as "closed too soon", "violated my stop", "didn't follow my strategy", "switched time frame", "fear of pulling the trigger", etc, you can easily identify a weakness in your trading strategy and start to focus on not making that specific error anymore, even if this will take time. Once you've wiped out an error, start focusing on another until you killed them all.
You can keep track of your currency trades building a personalized excel spreadsheet, a word document, a blog if you want to share your trading journal with other currency traders, etc.
A trading journal is divided into three main categories:
1) Numerical input - the date of each transaction, the currency pair symbol, the number of lots bought or sold and the gain or loss.
2) Decision process - Why did you buy or sell the currency pair?, Why did you close the trade?, List your error(s) if any,..
3) What can you learn from the closed trade? - List all mistakes you have made and make sure to address and be specific what steps will you take to ensure that mistakes make in a trade will not be repeated.
Is keeping a forex trading journal a difficult task?
No, but it requires some work and consistency to make it worthwhile. Keeping a trading journal is an invaluable tool for the currency trader as it helps you refine your strategies and avoid potential issues. Keeping a journal can may make the difference between being an average trader and an expert currency trader. The master key is to have some way to measure, track, and stay focused on improving your performance in the future. Keep a trading journal to become a better currency trader!
Example of a currency trading journal:
Trade number: 158
| Trade Date: |
05/07/2006 - 5.15AM |
| Currency Symbol: |
GBP/USD |
| Lot Size: |
25 Mini |
| Type of Trade: |
Long |
| Style of Trade: |
Short Term |
| Entry Price: |
1.8500 |
| Target Level: |
1.8590 |
| Stop Loss: |
1.8468 |
| Reason for Entry: |
EMA System Buying Alert |
| Reason for Exit: |
Violated Stop |
| Gain or Loss: |
-$1750 |
| Sell Date: |
05/07/2006 - 6.12AM |
| Trading Error1: |
System gave a buy signal but I didn't pull the trigger, after the GBP/USD was up 30 pips, I have entered the trade (fear to pull the trigger). |
| Trading Error2: |
Removed my original stop loss in the hope this trade would reverse and got me back in the profit, closed the trade finally at 1.8430 for a 70 pip loss. |
| Solution: |
Should have kept my original stop + when the system signals, I have to enter the trade without any fear. |
|
Forex Advertising | Forex Brokers | Free Forex Demo Account