Summary

Trading journals are extremely useful and they play a central role in the trading plan of most professional traders. Things like planning futures trades, recording existing positions, and recording any emotions that may arise are all important factors to pay attention to when building a profitable trading strategy.

Therefore, knowing how to create and use a trading journal is crucial to the success of any trader. Without it, traders may not be able to track their profit and loss positions. Or worse, their account could be ruined.


What is a trading journal?

A trading journal consists of a document that records everything you do as a trader, including strategy development, risk management, psychology, and more. Keeping a trading journal is simple, but it can be very useful if created and used correctly. It can bring valuable insights that prevent your account from getting wiped out, and it can also be the reason your account soars.

There are several reasons why keeping a trading journal is important, including:

  • It holds you accountable for your trades.

  • It makes you more disciplined and persistent.

  • It helps you discover profitable trading strategies.

  • It keeps track of your strengths and weaknesses.

  • It makes you more careful when analyzing potential trades.

Successful traders plan all of their trades carefully and keep a record of both their successes and failures in trading performance. By creating a trading journal and utilizing it correctly, you can become a successful trader no matter how volatile the market is.


How to Create a Trading Journal

You can find free trading journal templates in the next section, but it is also important to learn how to create a template. You can customize your trading journal in a variety of formats to suit your trading style and needs. As long as you have a place to plan and record your trading activities, you are all set.

First, you'll need to create a trading journal spreadsheet (e.g. Google Sheets, Microsoft Excel) and a written document (e.g. Google Docs, Microsoft Word). You'll use them to record your exact trades and your thoughts, respectively. If you prefer, you can also include the written document as a second tab in the spreadsheet (see template below).

Next, you need to know what to record each day so that your trading journal can have a significant impact on your success. You can find some trading journal examples online. But no matter which template you use, your spreadsheet should contain columns related to each of your trades. These columns may include:

  • Entry date

  • Exit Date

  • Contract Code

  • Direction (Long/Short)

  • Entry Price

  • Position size

  • Nominal Value

  • Stop Loss

  • Take Profit

  • Exit Price

  • Transaction Fees

  • Profit and Loss (P&L)

  • Profit and Loss Percentage (P&L %)

  • Remark

Some traders may also add timeframes, screenshots of their setups, and anything else they deem important. The bottom line is that the information is useful to the trader.

In your written document (or another tab), you should reserve a section for each day to write down all your feelings and thoughts so it’s easy for you to organize them.

Written documents allow traders to unleash their creativity, while spreadsheets allow them to measure the profitability of their creativity. Both are very useful when creating and using a trading journal.

It's that simple! However, learning how to create a trading journal is only the easy part. It will take a while before you understand how to use a trading journal. However, once you have a solid understanding of the basics, you'll be using your trading journal like a pro in no time.


Trading Diary Template

Good news! Binance Academy has prepared a simple yet effective trading journal template for you. All you need to do is click on the file, make a copy, and start using it right away!

➟ Binance Academy Trading Journal Template (Free!)

Notice in this example that we have added a second tab, which acts similarly to the written document mentioned above. This is where you can include various thoughts and comments to track your decision-making process and the results of previous trades.


How to use a trading journal

It is one thing to create a trading journal, but it is another thing entirely to understand how to apply what you learn from it into your trading system. Using a trading journal effectively can turn an unprofitable trader into a highly profitable trader.

Before you enter any trade, you need to have a good reason for doing it. This is where written documentation comes in handy.

As you watch the markets each day, many thoughts will pop into your mind and feelings will constantly flow through your body. You need to record these thoughts and feelings so that you can be aware of anything that may be helping or hindering your trading performance. This may include general market behavior, past trades, current trades, and potential trades.

Your written documentation can also help you sort out whether a particular trading idea is good or bad. You should examine your trading ideas from all sides so that you can discover the strengths and weaknesses of each idea.

Once you have written down your thoughts and emotions, it’s time to use a spreadsheet.

Your spreadsheet is not for creative expression, but for more logical record keeping than a paper document. This is where you'll record all of your transactions, so it's important to keep it organized and up to date.

An important element of keeping a successful trading journal is accurately measuring your successes and failures. You should make sure you keep accurate records in your spreadsheet so that you can measure whether the ideas you put forward in your written document are profitable.

A good habit is to record your trades immediately after you execute them. This will give you a clear picture of the trades and save you time in the future.

Another good habit to develop is to review your trading journal spreadsheet every day. This way, you can take a holistic look at your trading portfolio, giving you insight into your risk exposure level and whether you could potentially take more trades.


➟ Want to start your digital currency journey? Welcome to Binance to buy Bitcoin (BTC)!


Summarize

It doesn’t matter if you are a swing trader or a day trader. Becoming a successful trader is a very challenging thing. Without careful planning and recording of your trading performance, you will be flying around the market like a headless chicken. This rarely ends well.

By learning how to create and use a trading journal, you will be able to identify patterns and market trends more effectively. Writing detailed notes to record your thoughts, emotions, and trades is a simple investment that can pay off big.