Trading Journal
As part of your trading system, it’s important to keep a check on your open positions and your overall performance. The way to do this is to keep a trading diary in which you make notes about all your thoughts on each trade, your emotions, your reasons for and against, and any exit adjustments you make during the trade. It allows you to concentrate on your active trades, and gives you a good basis to review later whether you could have done anything better.
You will find things that you could have done better, and maybe places where you tried to second-guess your trading system. Your journal should be absolutely honest, and can be kept secret from anybody else if you wish — it’s for you to continually improve, and not for recriminations.
I don’t recommend reviewing your trades in the same day you took them, as emotions will still be fresh in your mind and you may find it hard to be objective. However, you should make a practice of reviewing both losing and winning trades, perhaps every week when the markets are closed. Remember that you will lose trades even if you act perfectly, it’s just the nature of the markets, so don’t think that your journal will always be able to tell you what you did wrong. In fact, you may find you did something wrong with a winning trade, but the market was kind and you got away with it.
It’s useful to print out a copy of the chart when you made your decision to take the trade, and to have the chart where you decided to exit. With a trailing stop exit strategy, you can look at a later chart to see whether the trend continued and you would have gained more with a looser stop which did not take you out of your position so quickly. Remember that each trade is individual, so one case of the trailing stop acting too quickly does not mean you should necessarily adjust your plan. You need to get a consensus opinion from several trades.
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