Why Keep A Trading Journal
What is the most important thing in trading? Discipline! Yes! As a trader, you need to learn the habit of keeping a trading journal. This trading journal will inculcate the habit of being disciplined in your trading. This is what the hedge funds do. They train their new traders and breed them into successful professional traders by telling them to keep a daily trading journal. This teaches them discipline. Managing millions of dollars portfolios requires a lot of discipline.
As an individual trader, keeping a trading journal is even more important as you are trading with your own money that you can't afford to lose. Capital preservation should be your number one strategy. Live to trade another is what you need to learn and inculcate in yourself.
For every trade that you make, you need to have a strong rationale for entering into the trade with clear cut entry, exit, take profit and stop loss strategies. When you enter into a trade, you should know beforehand when you are going to exit in the worst case scenario. Learn to manage risk first and only then think about taking profit.
Many traders think of the profit first and risk later. It should be other way around. First manage risk, once you have managed risk, only then you should think about take profit. Learn to take a calculated risk each time you enter into a trade plus develop the habit of learning from your mistakes. Now your trading journal need to have at least the following three parts. Let's discuss them.
Currency Pairs Checklist:
You need to keep a daily watch on the currency pairs that you usually trade. Calculate their daily ranges with pivot points. See, how each currency pair is behaving. What currency pair is range bound and what pair is in a trend. Identify the support and resistance on the different timeframes.
Potential Trades:
This part should include the list of trades that you plan to trade in the day plus the strategy that you will employ.
Completed Trades:
In this part, you need to analyze each completed trade, what went well and what went wrong. Be merciless when it comes to admitting your mistakes. Try to figure out your mistakes and learn from them.
Article Source: FxTradingStock.com
About the Author
Mr. Ahmad Hassam has done Masters from Harvard University. Get This 1 Minute Forex Trading System FREE. First practice on your Forex Demo Account and triple it twice in a row, only then trade live.
by: Ahmad Hassam
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Word Count: 394
Date: Thu, 24 Feb 2011
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