In brief
Trading journals are very useful, especially since they play an important role in the trading plans of most professional traders. Things like planning your futures trading, taking note of existing positions, and recording any predictions that may come up are fundamental elements to keep in mind when building a effective trading strategy can bring profit.
Therefore, knowing how to create and use a trading journal is crucial to any trader's success. Without it, a person can lose track of his winning and losing positions. Or even worse, they could burn their own account. Or even worse, they could burn their own account.
What is a trading strategy?
A trading diary includes a written record of everything you do as a trader, including strategy development, risk management, trading psychology and more. Keeping a trading journal is incredibly easy but very effective if created and used properly. While it can provide valuable insights to keep you from burning your account, it can also be the reason your account goes to the moon.
There are a number of key reasons to record and track transaction logs, including:
It helps you trade responsibly.
It makes you more disciplined and consistent.
It helps you identify profitable trading strategies.
It records your strengths and weaknesses.
It helps you be more careful when analyzing potential trades.
Successful traders plan all their trades meticulously and keep a complete record of their wins and losses. By creating a trading journal and using it correctly, you can become a successful trader no matter what the market does.
How to create a trading journal
A free trading journal template is available in the next section, but knowing how to create your own is also essential. You can customize your trading diary in a variety of formats to suit your trading style and needs. As long as you have somewhere to plan and record your trading activities, you will be fully guided.
First, you need to create a transaction log spreadsheet (e.g., Google Sheets, Microsoft Excel) and a one-page text document (e.g., Google Docs, Microsoft Word). You will use them to accurately record the trades you made and your corresponding thinking when making those decisions. If you want, you can include the document page as a second tab in the spreadsheet (see sample below).
Second, you need to know what to record daily so that your trading journal will have the best impact on your success. You can find several examples of trading journals online. But regardless of the template, your spreadsheet should have columns related to each transaction. These columns may include:
Order entry date
Exit date
Symbol
Price direction (long/short)
Order entry price
Position size
Nominal value
Cut losses
Take profit
Exit price
Transaction fees
Profit/loss (P&L)
Profit/loss ratio (P&L%)
Note
Some traders may also add timeframes, screenshots of setups, and anything else they may consider important. The bottom line is for the information to benefit them.
In your text document page (or in another tab), you should have a space to write down all your thoughts and ideas each day, and organize them afterward.
The text document page is where a trader unleashes their creativity while the spreadsheet helps measure the profits from this creativity. Both are very useful when creating and using a transaction journal.
And that's all! However, learning how to create a trading journal is just one very simple step. Knowing how to use them effectively is something you need to improve over time. However, as long as you have a good understanding of the fundamentals, you'll be using your trading journal like a pro in no time.
Transaction log template
Good news! Binance Academy has prepared a simple yet effective trading diary template for you. All you need to do is click File and Make a Copy to start using it right away!
➟ Binance Academy trading diary template (totally free!)
Note that, in this example, we've added a second tab that serves as the documentation page we discussed above. There you can add all kinds of thoughts and comments to track your decision-making process and the results of previous trades.
How to create a trading journal
Creating a trading journal is one thing, but knowing how to apply what you learn from it to your trading system is another thing entirely. Using a trading journal effectively can turn a losing trader into a profitable trader.
Before entering any trade, you need a good reason to start it. This is where your journal comes in handy.
Every day as you look at the market, ideas will appear in your head and hunches will flow through your body. You need to write down these ideas and feelings to spot any signs that may help or hinder your trading performance. This signal can be general market behavior, past, present and potential future transactions.
This text page is also where you will give different opinions on whether a specific trading idea you want to implement is effective or not. Your trading ideas should be reviewed over and over again, so that you can discover the strengths and weaknesses of each idea.
Once you've written down your thoughts and feelings, it's time to transfer them to a spreadsheet.
A spreadsheet page will have less creative space than a document page but more logical space. This is where you will record all your transactions, so keeping it organized and updated promptly is extremely important.
Another indispensable element of an effective trading journal is the accurate measurement of your successes and failures. With your spreadsheet, you should make sure to record accurate information so you can determine the profitability of the ideas developed in the text document page.
A good habit to get into is to record your transactions immediately after they are completed. That's when they'll be fresh in your memory and you'll save time in the future.
Another good habit to get into is to review your trading journal every day. That way, you can see the full picture of your trading portfolio, which gives you more insight into your risk level, as well as whether there is room to make any more trades. anymore or not.
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summary
It doesn't matter if you are a swing trader or a day trader. The path to becoming a successful trader requires a lot of effort to overcome challenges. If you do not plan and record your trading activities carefully, you will wander in the market without a defined goal. And this often leads to negative results.
By learning how to create and use a trading journal to your advantage, you can identify market patterns and trends more effectively. Writing down your ideas, feelings, and transactions in detail is worth the time investment. This is a very easy task but can bring great benefits to you.
