A forex trading journal is important because it defines your trading psychological emotions before, during and after exiting a trade.
This is because it involves recording of personal emotions and feelings before, during and after exiting a trade.
It keeps track of your trading performance from day 1 up to date, therefore shows how far you have gone towards your goal achievement and how good your system is doing.
Besides, it contains notes of all your trading process.
You may include market conditions, the size of the trade, expiration time, prices, whether or not you were successful, and even notes on your emotions.
When you review your journal,
It helps you to identify your common errors and mistakes which you can avoid in future. Also, you can do a self study and personal improvement after reviewing your trading journal.
Keeping a journal may seem boring and time-consuming never the less, recording your trades teaches consistency and discipline.
It helps you to build trading confidence and discipline through trading consistently when you learn to account for trading failures and mistakes.
Your trading journal is your personal trainer
A Forex trading journal include all relevant information about every trade you take.
You should not only include the profit/loss, but also why you went long/short and the reasons for taking that decision.
Also, write down your emotions about the trade before, during, and after you placed a trade.
In reviewing a trading journal;
You can spot the common mistakes you make and take specific action to avoid them.
To begin with, you already know what to do, when to do it and why you are doing it. Therefore analyzing your personal performance, you will be able to identify your strength and weaknesses.
For instance,
If you notice that you are having pre-mature stop out because you set your stop losses too tight when trading, you will add on in the next trade.
If you notice that you get more nervous holding a trade during news release periods, you can opt to close all trade in that time or trade after news.
Like wise, in case you were scalping, and you notice trading a higher time frame is more comfortable, you can revise your trading plan and adjust to trading a higher time frame.
Because you keep every detail of your trades, decisions and emotions, you are able to know what works and what doesn’t work.
Summary
But the good news is, there is always room for you to adjust and improve.
Checking up and recording all these major events of your trading is what will make you a great trader
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