Trading Journals: The Smart Investor’s Secret Weapon

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Succeeding as a day trader is a difficult road. The best day traders use every tool available to gain an edge. Keeping a trading journal is a great way to track your progress as a trader and learn from your mistakes. But a trading journal isn’t simply a list of trades. A good trading journal is a valuable educational tool that may be the single best asset you have as a day trader. Here’s a look at what exactly a trading journal is and how you can benefit from keeping one.

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What Is a Trading Journal?

In its simplest form, a trading journal is a daily record of your trading activities. But over time, a good trading journal will contain extensive data points that you can use to improve your trading. For some, the idea behind a trading journal is redundant since you already have a record of your trades on your account statements. But actually writing down and tracking your trades as they occur, along with proper notations, can be infinitely more valuable than simple statements. Some traders keep actual physical journals with pen and paper, but others use spreadsheet programs like Excel or other software programs to keep track of their trading information.

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What Should You Record in Your Trading Journal?

Your trading journal should obviously record any trades you make in a given day. However, a good trading journal will also have appropriate notes attached explaining your trades. For example, you might note why you did — or did not — trade a certain stock, or what your exit strategy may be. You should also note your trading results, specifically how much you made or lost on the trade. The more data points about your trades that you can include, the more information you can garner from your journal over time.

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How Can You Benefit From a Trading Journal?

Your trading journal has value as a record of your trades. However, the true benefit of a trading journal comes from your ability to analyze and learn from your trades. Here are some of the most important things you can learn from your trading journal.

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Which Strategies Work and Don’t Work

At the end of the day, the objective of any day trader is to make money. While learning about trading is great, if it doesn’t translate into profitable strategies, then the whole enterprise is a failure. A trading journal allows traders to analyze which strategies have worked and which ones have come up short. Information like this can be hard to sort out on a brokerage statement, especially if you’re a frequent trader, so keeping your own notes can do wonders in terms of analyzing your success as a trader.

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How To Remove Emotion From the Equation

There’s no way around the fact that day trading is stressful. When stocks take sharp drops in value — or even when they make big moves higher — emotion can often cloud the judgment. Keeping a trading journal can go a long way toward removing emotion from your investing. By methodically following the successful strategies you record in your journal, your trading will become more about art and science and less about emotion. You can also use your journal entries to analyze where your own emotional biases and tendencies tend to influence your trading, which can help you avoid being swayed by them in the future.

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How To Be a Disciplined Trader

Perhaps the greatest benefit of a trading journal is that you can’t hide from your trades. When you’re faced with the results of your trading in black and white, you’re forced to be accountable. While these results may sometimes be hard to swallow, by facing your shortcomings as a trader you can acquire the discipline to become more successful. 

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Last updated: May 18, 2021

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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