Summary
Trading journals can be very useful and play a pivotal role in the trading plans of most professional traders. Things like planning futures trading, documenting existing trades, and recording emotions that appear during trading are essential factors that must be gained awareness when developing a profitable trading strategy.
Therefore, knowing how to create and use a trading diary is essential for the success of any trader. Without this notebook, the trader may lose the ability to track his profitable and losing trades. Worse still, it could destroy the value of his investment account.
What is a trading diary?
A trading diary consists of a document in which you record all trading activities, including strategy development, risk management, psychological factors, etc. Creating a trading journal is very easy if you create it and use it correctly. While a ledger can show you valuable information that prevents the value of your investment account from collapsing, it can also cause the value of your investments to skyrocket.
There are many reasons why it is important to keep a trading diary, including:
It keeps you accountable to yourself.
It makes you more disciplined and consistent with yourself.
It helps you notice profitable trading strategies.
It documents your strengths and weaknesses.
It makes you more careful when analyzing potential trades.
Successful traders plan all trading operations carefully, documenting successes and failures in trading performance. By creating a trading diary and using it correctly, you can become a successful trader regardless of market movement.
How to create a trading diary
You'll find a free trading journal template in the next section, but it's also important that you learn to create your own. You can customize your trading book in many formats to suit your trading style and needs. As long as you have a notebook to plan and document your trading activities, that is what is important.
First, you need to create a trading journal spreadsheet (via Google Sheets or Microsoft Excel) and a written document (via Google Docs or Microsoft Word). You will use the first to accurately record your trading operations, and the second to record your thoughts. If you prefer, you can include the written document in the spreadsheet on a separate page (see template below).
Secondly, you need to know what you will record daily so that your trading diary has the greatest possible impact on the success of your trading operations. You can find several different templates for trading journals online. But regardless of which model you use, your spreadsheet should include columns for each trade. These columns may include:
Date of entry
Exit date
code
Trend (buy/sell)
Entry price
Transaction size
Nominal value
Stop loss
Make profit
Exit price
Trading fees
Profit/loss
Profit/loss ratio
comments
Some traders may add time frame columns, screenshots of settings, and any other details they consider important. The bottom line is that they record information that will benefit them later.
In your written document (or on another page), you should dedicate a paragraph for each day, in which you write and organize all your thoughts and ideas.
It is in this written document that the trader unleashes his creativity, while a spreadsheet measures the profitability of this creativity. Both documents are of great benefit when creating and using a trading journal.
And that's it! But learning to create a trading journal is the easy part. As for knowing how to use it, you must practice to master it over time. But as long as you get the basics right, you'll be using your trading journal like a pro in no time.
Trading diary template
good news! Binance Academy has prepared for you a simple yet effective trading journal template. All you have to do is click on the file and then copy it to start using it immediately!
← Binance Academy Trading Journal Template (Free!)
Note that, in this example, we've added a second page that acts like the typed document we discussed above. There you can add all your thoughts and comments to track your decision-making process and the results of previous trading operations.
How to create a trading diary
Learning to create a trading journal is one thing, knowing how to apply what you've learned to your own trading system is quite another. Using a trading diary effectively can make an unsuccessful trader reap a lot of profits.
Before entering any trade, you need to find a good reason for entering it. This is where the benefit of a written document appears.
Every day when you look at the market, thoughts will cross your mind and feelings will run through your body. You need to get these thoughts and feelings out in writing, in order to notice anything that may improve or hinder your trading performance. This may include general market behaviour, past, current or potential future trading.
In your written document you will argue whether making a particular trade is a good or bad idea. You should turn trading ideas upside down and search inside them, in order to determine the strengths and weaknesses of each idea.
Once you've written down your thoughts and feelings, it's time to head to the spreadsheet.
A spreadsheet is not a creative space like a written document, but rather a space for logical thinking. In this table you will record all trading operations, so it is important to keep it organized and constantly updated.
An important factor in the success of a trading journal is measuring success and failure with accurate metrics. You should make sure to keep careful records to measure whether the ideas you developed in your written document are profitable or not.
It is a good habit to record trades immediately after they are made. Then the details will be fresh in your mind, and you will save yourself time in the future.
Another good habit is to review your trading spreadsheet every day. This way, you can view your trading portfolio from a bird's eye view, and this gives you some information about the level of exposure as well as the space available for additional operations.
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Concluding thoughts
Whether you practice swing trading or day trading, your success can be a huge challenge. Without carefully planning and documenting your trading performance, you will drift from one market to another. This situation usually does not end well.
But by learning how to create a trading diary and use it to your advantage, you will be able to identify market patterns and trends more efficiently. Writing detailed notes to record your thoughts, feelings, and trading processes is an easy investment that can generate huge returns.
